HONG KONG: China's "communist capitalism" may be at a tipping point. Will the private interests of party members continue to gain at public expense?

Or is there enough momentum behind the latest drive against corruption to halt the slide towards a faux-capitalist state?

For clues watch how Beijing views links with Hong Kong and Macau, its two semi-autonomous "special administrative regions."

There has recently been evidence that the center is trying to get a grip on the most flagrant abuses of the system. In Macau, a former public works minister accused of $28 million in bribes is facing 76 charges of corruption and money laundering. The charges probably would not have been filed but for pressure from Beijing to clean up Macau.

The trial has shown up the alleged involvement of various mainland state enterprises in large-scale corruption, touched foreign-owned casino ventures and stalled the City of Dreams project of the American entertainment giant Melco and Australia's PBL group.

Meanwhile, across the border in Guangdong, a former police chief has been held on charges of stealing $1.3 million to gamble in Macau, and in another case a woman has been charged with defrauding accounts of $200 million to pay gambling debts.

Beijing also has announced a move to halve the flow of money from the mainland to Hong Kong and Macao by closing a gray-market currency swap center and cracking down on export of currency notes.

The clean-up effort also has extended to stock market listings, hitherto the easiest way for well-placed officials to become overnight multi-millionaires by being allotted shares at low pre-listing prices.

According to a World Bank report, the sale of shares in state assets at artificially low prices in just one year has cost China $9.5 billion, more than Beijing spends on rural education.

The recent issue of Petrochina shares in Shanghai, for example, could have put $3 billion into the hands of insiders with pre-public allotments. But the State Assets Supervision and Administration Commission now has warned that it will enforce tighter rules.

All this suggests that the government is seriously concerned over the impact on social stability of rampant money-grabbing by party and state officials. The crackdown may scare some. Interest rate increases, tighter money and the expected decline of the over-inflated stock market may reduce the problem by limiting opportunities.

However, a fundamental clean-up will be elusive as long as some among officials in the top leadership are suspected of corruption. Without cooperation from local officials nothing much will change. Enforcement of rules is lacking.

There has long been, for example, a ban on officials visiting Macau, but it has been largely ignored, even though the state has enough sway over Macau's casinos to discover the identities of the high-rollers.

As long as China stays awash with cash and excess foreign exchange earnings, the effort to halt capital flows will remain a case of tilting at windmills, and many of the players will remain, as now, state-owned enterprises.

One reason the clean-up is unlikely to go very deep is that the government in Beijing is more concerned with appearances than reality. It has been clamping down on the media to stop reports of unsavory developments - whether they involve official corruption, polluting factories or sleazy land deals. Only a real assault on corruption would encourage whistle-blowing and reporting of abuses.

Even if top party officials are not themselves getting rich, they have plenty of relatives who are. These so-called princelings are everywhere - as members of the board of state enterprises, serving as financial sector intermediaries, or using their influence in urban land deals. They have a sense of entitlement to wealth.

Even Prime Minister Wen Jiaobao, normally portrayed as sensitive to social disparities, has been touched - mainland Internet chat-rooms have reportedly been discussing the shopping habits of his wife.

Little is known for sure about the wealth of party leaders and their families. In China, the subject is taboo.

But the top leadership is well aware of the rising resentment fueled by the thwarted expectations of less-favored groups. Being simultaneously in government and business corrupts the party. But its leaders know that if they do not remain in business their power will rapidly erode. Nevertheless, it is doubtful that they have either the will or the means to change things. That is the fundamental contradiction of China's current version of Communism.