Chinese leader Deng Xiaoping's new open-door policy has ushered in an unwelcome arrival to the mainland economy, a flourishing black market in foreign currency.

Along Guangzhou's Liu Hua Road, street vendors pass foreign visitors muttering, "Change money?" while bolder hustlers accost passers-by with the going rate of exchange for the Chinese currency, renminbi, into foreign tender.

Like other illegal money changers on streets throughout China's major cities, Guangzhou's profiteers are after "foreign exchange certificates." These certificates were introduced in the spring of 1980 as a special scrip for foreigners, and are officially valued at 1 to 1 for the regular Chinese currency.

But on the black market, illegal money changers offer trades of 1.5 yuan to one of the foreign scrip.

The foreign scrip is issued in the same demoninations as the regular Chinese currency, but in different colors and slightly different sizes.

With the foreign scrip, local Chinese are able to buy luxury products, such as jeans and cosmetics, and domestic and foreign consumer goods and electrical appliances, such as color televisions and refrigerators, that are in short supply. Foreign scrip allows them access to shop and dine in the fancy joint-venture hotels that have been built in recent years to accommodate foreign tourists and businessmen.

As the closest major city to China's border with the British colony of Hong Kong, Guangzhou is also a thriving market for Hong Kong dollars. Ahead of the rest of the country in adopting the new economic practices endorsed last October in Peking, Guangzhou is also becoming one of China's most thriving black markets.

So open-handed is the sidewalk trade here that money changers no longer go through the ritual prevalent in Peking or Shanghai of selling fruit or clothing as a cover for their transactions.

"They dropped the papayas and bananas from their act many months ago," said a western oil executive resident in Guangzhou's fashionable White Swan Hotel, which was built with Hong Kong Chinese investment. "The authorities don't seem to care at all."

While China's soldiers earn about $11 a month and bureaucrats can pull in between $29 and $36 a month, black market money changers still in their teens can earn a profit of up to about $70 a month by hanging around near the new big hotels. Indeed, their talents are so reliable, that Chinese from other provinces haul sacks of yuan southward to Guangzhou to turn their unit's or factory's cash into hard currency for buying foreign consumer goods, manufacturing equipment and technology, according to diplomatic and Chinese sources.

In anticipation of the Chinese New Year's festivities in February, when Chinese on both the mainland and in Hong Kong visit each other, the black market rate for 100 Hong Kong dollars rose to 60 yuan, or about $21, earlier this month, compared to the normal street rate of 50 yuan and bank rate of 35 yuan.

At no other time of the Chinese calendar does consumerism hit such a peak. Anxious to meet the demands of the season, the streetside money changers dispatch their cash take of Hong Kong dollars and foreign scrip to the special economic zone of Shenzhen on the border with Hong Kong, only one hour's train ride away.

There, in the showcase of China's open-door policy and liberal foreign investment policies, the dominance of the Hong Kong businessmen has made Hong Kong dollars part of Shenzhen's basic economy. While local Chinese using hard currency from other countries would normally raise an official eyebrow, Shenzhen freely trades the best in designer jeans, cassette tapes, makeup and appliances trucked in from Hong Kong for both Hong Kong dollars and foreign scrip.

Illegal money dealers can use the hard currencies earned in Guangzhou streets to buy bundles of jeans for resale at a 20 percent profit back in the provincial capital. A young woman from Shenzhen, touring Guangzhou said her pay from a Hong Kong-owned computer factory left her enough spending money to buy a complete set of facial creams and tonics, items, she said that would probably be too expensive for most women in Guangzhou unless they had access to foreign scrip or Hong Kong dollars.

The black market is an embarrassing and unfamiliar problem for Communist officials to address, especially those who have to defend Guangzhou's economic advances to conservatives in the Chinese Communist Party who fear the "spiritual pollution" from too much western influence.

Yet the creation of a black market is partly the government's own doing. Until recently, China maintained an artificially inflated yuan, setting it at 1.5 to one U.S. dollar. At the same time, Chinese economists and bureaucrats used a second rate of exchange for internal transactions, closer to twice the official rate, reflecting the weakness of the regular Chinese currency against the desirability of the U.S. dollar.

The Chinese government has been conspicuously silent on the matter. To admit the market exists would also be to admit the past practice of the discrepancy in official and unofficial rates.

Last year, U.S. textile manufacturers protested to the U.S. government that the Chinese government's dual rate amounted to a subsidy for China's exporters.

Since then, Peking has let the yuan slip, and in early January it was fixed at 2.8 to the dollar, a devaluation of 40 percent from the year before. Although the adjustment was attributed to the strong U.S. dollar's position in international markets, the move was seen by foreign economists as a tacit admission of increasing domestic currency problems.

The cash chaos prevailing in Guangzhou is proving as much of a headache for foreign investors as it is for party bureaucrats. Hardest hit are the big new joint venture hotels that had planned to pay back million dollar foreign loans with hard currency earnings from foreign tourists and businessmen paying in foreign scrip.

But the hotels, with their exclusive discos and fancy restaurants, have also become increasingly popular with local Chinese who are paying in yuan instead of the required foreign scrip.

In those cases, said an executive at the China Hotel's exclusive Four Seasons Restaurant, "we charge them a deposit of 50 percent . . . if they try to pay us in" yuan. "They get their money back when they return with foreign exchange certificates." At the disco, and other hotel outlets, the surcharge is 30 percent.