Thirteen years ago, China's leaders had smashed the biggest freedom movement since they took power and installed an owlish engineer at the pinnacle of Communist power. Mindful of the disintegrating Soviet Union, many experts -- including some in China -- predicted then that neither the party nor the engineer would last.

But Jiang Zemin, who took over at that fateful moment, defied the odds, as did the Communist Party he leads. Starting Friday, Jiang will preside in triumph over the 16th Party Congress, a week-long gathering of 2,120 delegates held every five years that will anoint a new generation of leaders for the world's largest remaining Communist organization.

China's state-run media have portrayed the gathering as a defining moment for the party, the first such meeting of the 21st century, which many Chinese hope will belong to their country. The congress will set the tone for the next five years of the party's rule -- fixing important directions for relations with the United States, economic reforms and the dream of uniting with Taiwan.

Jiang, the 76-year-old president, will step down from his post as general secretary of the party. His successor, Vice President Hu Jintao, will also assume Jiang's title as president in March during China's annual legislative session. But while it appears Jiang is leaving the scene, he is expected to emerge as the victor. Chinese sources said he has stacked the all-powerful Standing Committee of the Politburo with his allies, ensuring his continued influence. In addition, the congress will focus much of its attention on eulogizing Jiang's 13-year rule, seeking to cement his legacy in the line set by Mao Zedong and Deng Xiaoping.

The Jiang period was one of subtle but profound political, economic and social transformation. It is that transformation that has allowed the Communist Party to survive, defy a wave of democratization that swept through the old Warsaw Pact countries and the "Little Tigers" of East Asia, and maintain a 9.3 percent average annual growth rate.

It is unclear whether this transformation will keep the Communists in power over the years to come. The Communist Party remains above the law, so corruption among Communist officials runs rampant. It is hard to balance political dictatorship with increasing economic freedom. And the bad loans held by China's banks could one day make Japan's decade-long crisis look mild.

But during Jiang's rule, the party has done three things it had never done before, thereby strengthening its hand. It kept to a minimum the political infighting that brought the party to the brink of collapse in 1989. It stepped out of people's lives. And it abandoned the downtrodden, siding with those who have emerged as winners in the economic reforms.

As a result, today's China acts like a massive corporation with the Communist Party as its board of directors. Under Mao, the party believed it had to control 100 percent of the country's stock -- all organizations, religions, businesses, farms, factories, schools and even people's thoughts -- to control the country. But Jiang and his lieutenants have understood something capitalists have known for years: Even if they control less than 50 percent of the stock, as long as they are the biggest shareholder and have the right shares -- such as the media, the security services and ways to tax the best companies -- they can control China.

Over the past 13 years, the government has withdrawn from the private lives of most Chinese people and opened large sectors of the economy to private or foreign firms. Chinese are now generally free to do business, find work and live almost anywhere they please. While civil rights guarantees fall short of Western standards, people nonetheless enjoy freedoms that, for them, are unprecedented. China has evolved from a totalitarian state, in which the party dominated public and private space, to an authoritarian state, which has allowed unparalleled freedom in the economy and people's private lives but maintains a stranglehold on public life.

The party has also divested itself of its former base constituency of workers and farmers. In 13 years, without changing its name, China's Communist Party has become the party of the economic, intellectual and political elite. This shift, from a revolutionary party to a ruling party, is a key reason why the Communists remain in power.

"There is a pretty stable alliance between the political, economic and intellectual elites of China," sociologist Kang Xiaoguang wrote this spring. "The main consequence is that the elite won't challenge the government."

The party's new base will be formally recognized during the congress with new rules welcoming businessmen into the fold and enshrining the "Three Represents" doctrine into the party constitution. That doctrine, attributed to Jiang, states that the party now represents the most advanced productive and cultural forces in society, buzzwords for the elite.

Party Ties Matter

Despite the changes, many urban Chinese say the party does not matter to them, and some have taken this as a sign of the party's irrelevance. "Is this the 11th Party Congress?" asked a cultural maven from Shanghai. "Do they hold these things every four years or five?" wondered a software executive from Beijing.

But the reality is that the party matters, and matters a lot.

"To really make it in China, you have to have the party's blessing," said a venture capitalist in Beijing. "Call it a corporation, a mafia, a protection racket, whatever. But they run the show."

The party, Kang wrote recently, keeps the country's people like "a pan of scattered sand" -- somewhat free as individuals but unable to unite. Any challenges to the party as an organization are met with a ferocious and bloody response. The two-year-old crackdown on the Falun Gong spiritual movement, which has left hundreds dead and thousands jailed, is an example.

"You can say whatever you want in China today," said Liu Xiaobo, a literary critic who spent years in jail after the 1989 crackdown, "as long as you do it alone."

The party has also seemed to weather the fact that it stands for nothing anymore but power. The death of ideology is something that seems to bother foreigners more than Chinese these days, possibly because the Chinese were here when the party stood for something and life was a lot worse. In any case, Chinese now join the party for the same reason people join a big company in a company town: self-interest.

Lu Guanqiu, a former blacksmith who sits at the helm of a company that manufactures car parts and is worth $480 million, said he joined the party for a simple reason. "When I first led this company, I was not a party member and business was tough because China is led by the Communist Party," he said. "So I became a party member and things became easier." Lu was twice a delegate to the party congress. The party has also been adept at rising to the political challenges posed by new technology.

When the Internet exploded in China in the late 1990s, many predicted it would bring with it a social and political revolution. But Beijing, with 30,000 "Internet police," has acted swiftly to clamp down on dissent through the ethers. Western firms such as Yahoo and America Online have signed pledges agreeing to cooperate with government censorship regulations. The most recent regulation, which bans Web sites from "producing, posting or disseminating pernicious information that may jeopardize state security and disrupt social stability," took effect Aug. 1.

In the mid-1990s, Western scholars pointed to the explosion of social organizations as signs of the birth of a civil society in China. But again, the party has moved to limit their growth and co-opt or frighten organizers. Since 1999, when the party issued new regulations for nongovernmental organizations, the number of such organizations fell significantly, according to statistics from the Civil Affairs Ministry.

Away From Reform

The party's successes among intellectuals and the rich, and with technology and the media, have convinced many in the leadership that fundamental political reform is unnecessary. In many ways, today's Communist leadership is less pro-democratic than were the men who ran the country in 1989.

Gone is talk about splitting the functions of the party and the government, which reformers had pushed as a way to make the party more answerable to the law. In 1988, not one provincial party secretary simultaneously headed a provincial legislature. Today, 12 of the 32 party secretaries also run legislatures. That number is expected to rise as the leadership in Beijing seeks to ensure that no political experiments grow out of control in the provinces.

In his essay, Kang reasoned that the main source of future political instability would combine a nationwide crisis with unrest among the downtrodden in the cities and countryside. Among those sectors, Kang said, "the reforms in the 1990s have brought mostly pain." Rural incomes, for instance, have fallen since 1996, and more than 30 million people in the cities have been laid off by tottering state-owned firms since 1997.

Kang identified two possible sparks: a banking failure or an economic slowdown. The number of nonperforming loans in China's banking system, for example, is estimated at 37 percent of the gross domestic product. And China's current robust growth rate of 7 percent relies on a fiscal stimulus package and deficit spending that cannot go on forever.

But China's leaders still possess enormous resources that could be sold to keep the state afloat. Land has yet to be privatized and that could generate billions. Telephone companies, oil firms and power plants could be sold off as well.

Barring an economic collapse, most Chinese analysts believe that the party will be able to face down challenges from the poor. The increasing number of disturbances, riots, petition drives and strikes by China's dispossessed remain local in nature and the government has the ability -- and, so far, the will -- to crush them.

A key reason that many Chinese believe the party can face down these challenges is that almost no one is able to lead a potential revolution; the party has co-opted the most vital segments of society.

In 1989, China's leaders faced an intellectual elite roiling with dreams of democracy, of becoming "a new America." Now, the United States as a political model has been discredited, and many intellectuals, artists and writers tacitly support the state: Zhang Yimou, a bad-boy filmmaker of the 1980s, directed China's official documentary for the 2008 Summer Olympics.

"I bump into friends from '89," said dissident Liu. "The life they searched for is the life they have now: a car, money, a girlfriend, a house. Others who still have ideals have turned to religion."

The growth of China's economy, bad press for democracy in Russia and Indonesia, and a series of clashes with the United States have also helped convince many intellectuals that the party is China's only hope.

Beijing has also made life more comfortable for its intellectuals, doling out higher salaries, well-appointed subsidized apartments and other perks. When the state banned the Hong Kong-based Phoenix TV last year, intellectuals from Beijing University, People's University and Qinghua University had the service turned back on within four days.

The party's alliance with the rich is just as tight. With its pro-growth policies, ban on independent trade unions and low environmental standards, the government has created an advantageous atmosphere for the economic elite to make money. Policies so favor the rich and business that China's economic program, in the words of one Western ambassador, resembles "the dreams of the American Republican Party."

An on-again, off-again plan to establish a social security system is an example.

In February 2000, workers at a molybdenum mine in Liaoning province rioted because the factory was going bust, the management had made off with loads of cash and no one was paying their pensions. The unrest renewed calls to create a social security net for retired workers.

Premier Zhu Rongji came up with a plan to use the stock market to raise cash for the pension fund by selling a percentage of the state's stakes in many of the 1,600 companies listed on stock exchanges in Shanghai and Shenzhen. The plan began on June 12, 2001. By Oct. 22 that year, a coalition of investment houses and stock market investors had collaborated to force Zhu to scuttle it.

Selling state shares, they argued, would have caused the market to slide. When forced to choose between investors and retired workers, the state chose the richer of the two.

Vice President Hu Jintao, left, is expected to replace Jiang Zemin as Communist Party leader during the week-long congress that begins Friday. A man walks past busts of former leaders Deng Xiaoping, left, and Mao Zedong, center, and current president and Communist Party leader Jiang Zemin.