BEIJING - A startlingly frank new report from the Communist Party's inner sanctum describes a spreading pattern of "collective protests and
   group incidents" arising from economic, ethnic and religious conflicts in China and says relations between party officials and the masses are
   "tense,  with conflicts on the rise."

   The unusual report, produced by a top party research group and published this week by a Central Committee press, describes mounting
   public  anger over inequality, corruption and official aloofness and it paints a picture of seething unrest almost as bleak as any drawn by
   dissidents abroad. It describes a growing pattern of large protests, sometimes involving tens  of thousands of people, and an incident in
   which a defiant farmer cut off a tax collector's ear.

   The report warns that the coming years of rapid change - driven in part by China's plans to accelerate the opening of its markets to foreign
   trade  and investment - are likely to mean even greater social conflict. It makes urgent but vague recommendations for "system reforms" that
   can reduce public grievances.

   "Our country's entry into the World Trade Organization may bring growing dangers and pressures, and it can be predicted that in the
   ensuing period the number of group incidents may jump, severely harming social  stability and even disturbing the smooth implementation of
   reform and opening  up," states the report, "China Investigation Report 2000-2001: Studies of Contradictions Among the People Under New  Conditions."

   The study was conducted by a research group of the Central  Committee's organization department, which runs crucial party affairs including
   promotions, training and discipline. The department is headed by Zeng Qinghong, a powerful and secretive adviser to the party chief, Jiang
   Zemin, who is widely believed to be seeking higher office, and it appears to represent an attempt by Mr. Zeng or other senior officials
   to set a reform-oriented agenda for party deliberations and the leadership  changes expected in the next few years.

   To make the study, researchers visited several provinces and worked with other party scholars to review trends in 11 provinces. The
   308-page  report cites growing social and economic inequality and official corruption as over-arching sources of discontent. The income
   gap is approaching the "alarm level," it says, with disparities widening between city and countryside, between the fast-growing east
   coast and the stagnant  interior, and within urban populations. The report describes corruption as "the  main fuse exacerbating conflicts
   between officials and the masses."

   Protests of all kinds have become more common as China changes from  a state-run economy - a risky course the leadership feels is necessary to
   China's long-term growth - and as the public becomes more assertive about rights.

   Workers laid off from failing state enterprises have protested misuse of company assets by managers and failure to pay pensions and living
   stipends. Farmers angered by unbearable taxes and callous officials have had  numerous deadly encounters with the police.

   The report, published by the party's Central Compilation and Translation Press, was available for purchase on Friday at the press's
   office, where buyers were trickling in based on word-of-mouth. But it has not yet been widely publicized or sold in the country's bookstores.

   The study was intended, its introduction says, to analyze the causes of growing popular unrest and to propose countermeasures, and its findings
   reflected special research in selected provinces.

   Its somber analysis contrasts starkly with the upbeat messages generally offered in official speeches and newspapers, and it is
   unclear why  central party officials broke with the tradition of suppressing sensitive  information.

   The book is at once a call for vigilance against threats to the social order and a plea for speedy reforms within the party and government,
   such as strengthening the legal system, reducing the number of local officials and expanding "socialist democracy." It warns that economic
   development must benefit the majority of people and that victims of change must be fairly compensated, an implicit admission that this has
   often not  happened.

   At the same time, it attacks the notion that Marxism is obsolescent, calls for more "ideological work" to inculcate an innovative spirit and
   aims to buttress the party's continued monopoly on power through "system  innovation."

   Beyond stimulating discussion, the report could represent an effort by Mr. Zeng or others to lay out their credentials as the Communist Party
   enters an uncertain transition and chooses new leaders. Mr. Jiang, who is also president, and other top leaders are expected to relinquish
   most of their party and government posts over the next two years.

   The report provides no estimate of the number of disturbances, but its strong language suggests that the scale of demonstrations and riots has
   been greater than revealed by the official press or in reports abroad.

   While security agencies have not been able to prevent such incidents, they have so far prevented disaffected workers and farmers in different
    regions from linking up and forming networks that could pose an organized  challenge to Communist rule.

   The government's response to unrest has been two-pronged: containment and reform. In well-publicized speeches last year, President Jiang and
   others described the need to "nip in the bud" any threats to social stability, which in practice has meant stricter policing of dissenters
   and tighter curbs on publishing.

   This year, a national "strike-hard campaign" against crime has included a jump in arrests and prison sentences for those accused of stirring
   ethnic divisions in regions such as Xinjiang, the heavily Uighur Muslim province in the west. Independent labor organizers have also been  jailed.

   This week, the commander of the People's Armed Police, the paramilitary anti-riot force, told his troops that they must step up
   preparations to control "sudden incidents" and improve coordination with local police  forces.

   "We must explore reform of weapons and equipment allocation, ensuring sequential deployment and rapid response," said the commander, Wu
   Shuangzhan, in a speech reported in The People's Armed Police News.  Though the country is generally stable, he said, "we must be crystal
   clear about the stern developments we face in our work."

   At same time, party leaders are pushing internal change. They have made public spectacles of selected corrupt officials and are now
   requiring all officials to study new ideological formulations, attributed to Mr. Jiang, which are said to call for creative change
   while safeguarding party rule. The government has started with much fanfare a program to increase investment in neglected western and rural
   parts of the country and has vowed, without saying how, to increase farm incomes.

   The new report gives general prescriptions, such as adopting economic and tax policies to reduce the income gap, improving social security
   for workers and building "socialist democracy" in which people have more control over their affairs.

   "In recent years some areas have, because of poor handling and multiple other reasons, experienced rising numbers of group incidents and their
   scale has been expanding, frequently involving over a thousand or even ten thousand people," it says.

   And protests are becoming more confrontational, the report says.  "Protesters frequently seal off bridges and block roads, storm party
   and government offices, coercing party committees and government and there are even criminal acts such as attacking, trashing, looting and  arson."

   Among the specific incidents the report cites was one in Xinning County, Hunan Province, where a resisting farmer cut off the ear of a
   township party official trying to collect fees. In Longshan County, also in Hunan, two officials died in a clash with protesters.

   The groups participating in protests, the report says, "are expanding from farmers and retired workers to include workers still on the job,
   individual business owners, decommissioned soldiers and even officials, teachers  and students."

   The report adds that "hostile forces" at home and abroad, seeking to create social turmoil, sometimes fan the divisions over ethnicity,
   religion and human rights.

   The book's prediction of increased conflict as China enters the World Trade Organization suggests the complex challenge to those hoping for
   more democracy. Political liberals inside China, and many business leaders  and scholars abroad, say that growing trade, foreign
   investment and private ownership and the spreading use of the Internet here will push China  toward free speech, rule of law and more
   accountable government. Just this  week, as President Bush endorsed renewal of normal trade status for China, he said, "Open trade is a
   force for freedom in China, a force for stability in Asia and a force for prosperity in the United States."

   Officials fear that the predicted jump in unemployment and availability of jobs independent of the state will lead more people to fight the
   system. And, for the next few years at least, that could mean more, not  fewer, arrests.