The high-walled Peking villa has huge rooms, fine carpets, tiled bathrooms and a beautiful garden for the old general who lives there. But the occupant and his guests use the garden "to relieve themselves," said one recent Chinese visitor. "They told me that's the way they did it in Yenan, the old revolutionary base."

In a Chinese capital now obsessed with the issue of privilege, this is how the communist upper crust lives, tasting the bigger and better things of life with a peasant gusto that simultaneously enrages and fascinates ordinary Chinese.

About 300 favored families now drive their own private cars here. These vehicles sold by departing foreigners to the government store have curtains added to the back windows so even a humble Volkswagen achieves the look of a prerevolutionary Mandarin's sedan chair. Of 268 Peking students chosen to study abroad recently, at least 60 percent are from well-connected families, one professor said, including some going to American junior colleges who are "really stupid."

The minute they arrive it will show," he added.

Three leading government officials -- the commerce minister, the sports minister and the Foreign Trade Promotion Council chairman -- are called behind their backs "the three kings of drink," a Chinese pun referring to their huge restaurant bills and the fact that all three are named Wang, or King.

Commerce Minister Wang Lei is in particular trouble now because he did not pay his restaurant tabs and an enraged young cook named Chen Aiwu, now the hero of the antiprivilege forces, exposed him. But Wang and the other kings have yet to be removed from their thrones.

In the Hunan provincial capital, Changsha, thousands of students demonstrated after their new university leaders moved into new five-room apartments while they still slept in drafty converted lecture halls. Many students become ill and one died.

But cynicism about the soft life of higher party officials has sunk so deep into the society that such demonstrations are rare. The government press has begun an energetic campaign against privilege, but Chinese prefer to shrug their shoulders and joke about it.

"The only fat people in China are ganbu [officials]. At least that's the favorite joke," said an American who has taught in a university in northeastern China. "Last winter when it was so cold I stuffed books inside my thick padded coat and waddled into class. My students had a good laugh. 'I must look pregnant,' I said. 'Oh, no' they said. 'You just look like a ganbu .'"

Chinese still talk about the excesses of yet another Wang, this one the now demoted former bodyguard to Mao Tse-tung, Wang Dongxing. He appropriated $4.2 million in public funds to build himself a palatial residence, more elaborate than Mao's, including gymnasium, cinema and suites for 17 relatives. One playful Chinese bachelor complained that he was unable to find a wife because he shared a single room with his aged parents. He sent one of the local newspapers a letter proposing to Wang's daughter.

"I have never seen your face but already I am in love with you," it went. "Do we get a suite of our own?"

Chinese outrage at special privileges often dissolves into jokes because so many people share the hope that some distant relative may bring benefits. All Chinese engage in the ancient system of string-pulling and favor-trading, called "going in the back door," which they have little hope or desire to change.

The records of imperial dynasties show that noblemen's children were granted high posts and salaries while still in their cradles. Since the communist revolution propelled so many men of humble origin to high places, ties of favoritism now go deeper.

Peking factory foreman Li Guisheng recently complained that one of his young assembly line workers snubbed his nose at coworkers because his father, now an upper grade official, gave him coveted sports events tickets whenever he asked for them. The old Chinese saying is: "Whenever you get to the top, even your chickens and dogs go to heaven."

Many of China's communist leaders seem genuinely embarrassed by their higher living standards and solve the problem by conducting their private lives behind very high walls. The house of China's principal leader, Vice Chairman Deng Xiaoping, sits unseen behind a 10-foot wall and under a canopy of trees on a street just north of Peking's Forbidden City.

Like many other top leaders, however, Deng appears now to spend much of his off-hours in a home at Jade Spring Mountain, in the western hills several miles out of Peking. It is a quiet, wooded neighborhood that is off limits to foreigners and ordinary Chinese who came out to enjoy the scenery.

Many leaders also have homes in Beidaihe, a resort on the Bohai Gulf northwest of Peking, but some have given those up to lesser party lights and artists because of the rush of tourists. "Now most prefer to live in Qingdao [a more remote Shandong Peninsula resort famous for its beer]," said a Chinese familiar with some of the leading families. "They think its quieter."

The furnishings in the homes of the well-connected are of good quality but simple, to judge from visitors' reports and a look at rooms used by high leaders in vacation spots like Anhui's Yellow Mountain. Their most enviable privilege to ordinary Chinese is simply space.

Officials rated "high-level," grade 13 and above on a 26-grade scale, receive at least four or five rooms while workers are lucky if they get two. A Chinese who recently visited such an apartment noticed a small refrigerator, some framed pictures and new furniture, small luxuries that would not be found in an ordinary apartment.

Apartments in a building for higher level officials near the American diplomatic compound in Shanghai appear to all have color television sets and air conditioners, also uncommon items here.

Chinese officials enjoy, as officials do in other socialist countries, special book stores, tailor shops, hospitals and restaruants. Many of these establishments, except the special book stores which contain pirated best-sellers, are also open to foreigners, but not to ordinary Chinese without special connections. Bathtubs and private telephones at home are usually the perogative of department chiefs and agency heads. Workers use street phones and the local bathhouse.

The government press ignores these differences, only criticizing officials who get greedy or begin to demand advantages for relatives who have no right to them. Prominent Central Committee member Liao Chengzhi became the subject of adverse references when several of his relatives turned up among a Sino-Japanese friendship tour of Japan last year.

Politburo members Fang Yi and Geng Biao, who have both visited the United States, are said to have been particularly agressive at arranging overseas assignments for their children. One of Fang Yi's sons is reportedly married to Gen Biao's daughter, and both have jobs in Hong Kong, a much sought after post.

In some cases, Politburo members have been sensitive enough to the problem of privilege to make sure their children are qualified. Foreign Minister Huang Hua's son, now a freshman at Harvard, passed his entrance interviews and English test with flying colors. Some children of high officials reacted to their political troubles in the 1960's, during which many were sent to farms, by demanding more privileges now.

Others seemed to have acquired a common touch. Deng Xiaoping's son Deng Zhifang, now studying physics at the University of Rochester, was known at Peking University for his shabby clothes, ratty book bag and offbeat sense of humor. A friend teased him before he left China that he might come back married to a young American.

"Actually," he said, "I have plans to marry a rich widow."