Liu Changle, the Chinese media tycoon, had just stepped off a plane in Paris and turned on his cell phone when one of his reporters called with the news: Zhao Ziyang, the Communist Party leader ousted for opposing the Tiananmen Square massacre, had passed away after 15 years under house arrest.

It was a politically sensitive story. Zhao's name had probably not been uttered on Chinese television in more than a decade. But the reporter wanted to announce his death on Liu's network, Phoenix Satellite Television. She had even slipped into the hospital where Zhao died and filmed his empty room.

Phoenix is the only private television network in China allowed to broadcast news in Chinese, a privilege that reflects the warm relationship Liu has cultivated with party leaders. But on the phone that day in January, he defied the authorities and quickly approved the Zhao story, recalled the reporter, Rose Luqiu.

While the government barred its own radio and television stations from reporting Zhao's death, Phoenix led its evening newscast with her brief report. Then the station's commentators began discussing Zhao's legacy and whether his death might prompt new calls for political reform.

Almost immediately, one after another, provincial governments began cutting off the Phoenix signal. Alarmed, Liu flew back to Beijing, smoothed things over with the authorities -- and stopped his journalists from pushing the Zhao story any further.

"We walk on a tightrope," says Liu, 53. "If we do everything the government wants, people will treat us with contempt. If we follow the people completely, the government will wipe us out. . . . It can be very uncomfortable."

Frustrated by the party but loyal to it as well, Liu is emblematic of China's new elite. These officials, businessmen and educated urban professionals have benefited most from the party's decision to embrace economic reform while maintaining restrictions on political freedom -- and could determine the future of the country's authoritarian political system.

More than 15 years after the Tiananmen massacre, that system is beset with challenges: rising social unrest, rampant corruption, a bankrupt ideology. But the party's grip on power appears firm, in part because it has won the support of people such as Liu, who presides over a business empire with $500 million in assets, and earlier this year was awarded a seat in the party's national advisory congress.

The story of Liu's climb to the top -- and of the compromises he made to get there -- offers a glimpse into the party's resilience and its success at making friends. But Liu's push for greater media freedom also suggests the Chinese elite is making new demands of the party and might eventually force it to change.

Liu's conflicting roles -- as a beneficiary of party rule and a sponsor of journalism that undermines it -- highlight a critical question about China's future: Will the country's new elite act as an obstacle to democratic reform or an advocate of it?

Choosing His Words

At 6 feet 1 and more than 220 pounds, Liu is a large man, and also gregarious, the kind who can dominate a room by force of personality. Known as a religious Buddhist and a gourmet, he is neither the flashiest nor the most secretive of China's new tycoons.

In an interview in his office overlooking Hong Kong's harbor, he presented himself as an open-minded intellectual who favored gradual democratic reform for China. But he chose his words carefully, stopping when he sensed he was going too far, then joking about jeopardizing his business.

"The path of China's political development is toward greater democracy, toward greater openness," he said in a moment of candor. "China's leaders know this. They may not want to think about it, but it's an objective problem in front of them.

"I often discuss these questions with very high-level leaders. The Western parliamentary method is impossible now. I think a system like the Taiwan elections, like South Korea, like Japan, it's all impossible.

"China is so big, with 800 million, even 900 million people who are illiterate," he added, overstating the official Chinese figure by a factor of 10. "If you adopt earth-shaking ideas of democratic reform in an instant, it won't work. I sincerely believe this. China must move toward democracy. I'm sincere about that, too. But as to speed, as to method, I feel we can't entirely copy the West's speed and the West's methods."

Pressed to say if he supported the one-party system, Liu hesitated and asked to respond in writing. A week later, he sent an answer that demonstrated the political skill -- some say slipperiness -- that has taken him so far.

"Regarding 'one-party rule,' it depends on how you look at it," he wrote in an e-mail. "Ordinarily, 'one-party rule' is connected to dictatorship and being closed off. China now is still under 'one-party rule,' but is it a dictatorship? Is it closed? I think no one can rule like a dictator now or close off China again, because the larger environment won't allow it."

"I think Phoenix can play a role in promoting the construction of China's democratic system," he added, "but it must be orderly and gradual."

A Rising Star

At an early age, Liu understood both the benefits and risks of working with the Communist Party. The son of party officials who had access to a car and a swimming pool, he enjoyed a relatively comfortable childhood.

But in Mao Zedong's repressive Cultural Revolution of the 1960s and 1970s, his parents were denounced as political criminals and sent to labor camps. At age 15, Liu watched as his father was paraded through the western city of Lanzhou wearing a dunce cap. At 19, he sought refuge from the chaos by enlisting in the People's Liberation Army.

Liu said he spent the next decade in units assigned to build roads and provide disaster relief. But he embraced the party, writing for military newspapers in his free time. "It was all essays about studying the works of Mao, or reports about troops reading Engels and Marx," he recalled. "But people thought I was a genius."

After the Cultural Revolution ended, Liu landed an assignment in Beijing as a military journalist with Central People's Radio. In the more progressive 1980s, he pushed for live coverage of China's first rocket launches, arguing against those worried about broadcasting a potential failure, one colleague recalled. Another remembered that Liu insisted on covering a submarine test from aboard the vessel.

If Liu favored openness, he never put his career at risk. He produced propaganda, was promoted to management of the radio station and developed a reputation as a reporter who excelled at befriending senior officials.

Wu Xiaoyong, a colleague who ran China's main English radio service and the son of the foreign minister at the time, remembers Liu asking for a favor in 1987. He wanted to cover a visit to the United States by Yang Shangkun, the powerful military official who was deputy to the Chinese leader, Deng Xiaoping. Wu secured him a place on the trip. "He got to know Yang Shangkun very well," Wu recalled. "Yang liked him a lot, and his children became his personal friends."

By the late 1980s, Liu was a rising star in the army and held a rank equivalent to colonel. But friends say he was passed over for a senior post and grew frustrated with the party's limits on news coverage. Looking for another career, he turned to the officials he had interviewed over the years.

One of them, a senior executive at a state-owned oil firm, wanted him to do a story about "the company's glorious history," Liu recalled. He agreed, and asked for a job in return. Soon afterward, the company named him its newest oil trader -- in Houston.

Favors and Wealth

Liu declined to discuss the Tiananmen Square massacre, but his actions at the time are revealing.

In the wake of the violent suppression of the pro-democracy demonstrations in 1989, many officials and state employees quit their jobs in disillusionment. After just a year in Houston, Liu resigned from the state oil firm, too.

Then he tried to help two friends caught in the crackdown: Wu, who was imprisoned for daring to report the massacre on state radio, and Su Xiaokang, a college classmate and dissident writer who fled into exile after police issued a warrant for his arrest.

According to both friends, Liu returned to Beijing and persuaded Yang Shangkun, then China's president, to call the minister of public security and request Wu's release. Later, Liu also helped Su get a visa to return to China for his father's funeral. Through a spokesman, Liu confirmed he tried to assist his friends, but denied any special relationship with Yang.

If Liu helped friends caught in the crackdown, he never turned against the government that ordered it. Instead, he maintained good relations with officials -- and profited spectacularly, emerging in the 1990s as one of China's richest men.

The story behind Liu's quick accumulation of wealth remains a mystery. For years, he has been dogged by rumors that the government, even the Ministry of State Security, played a role in his success. Liu laughed off such stories, but was vague about his early business deals and whether he received loans from the state, saying only that he moved to Hong Kong and made his first fortune by exporting refined oil.

China's transitional economy was full of opportunities for those with connections, and the oil industry was no exception. At the time, there were two prices for Chinese petroleum products, an official price from the planned economy and a market price, as in many transitional economies.

"If you could purchase crude oil at the official price, refine it, then export it at the market price, you're going to make millions easy," said Wu, Liu's radio colleague, who now runs Phoenix's U.S. operations. "The key was to get the deal, to get the permit. And to get the deal, you had to know the right people." For someone like Liu, he added, that was never a problem.

Liu quickly branched out from oil into highway construction, real estate, port facilities, hotels and hospitals, becoming a multimillionaire in a country where most people still make less than $1,000 a year. He keeps homes in Beijing, Hong Kong and California, and sent his twin daughters to college in the United States.

In 1993, Liu invested in a 12-hour documentary on the life of Deng Xiaoping produced by China Central Television, or CCTV, the main state broadcaster. It was unheard of for a private businessman to participate in such a sensitive project, but in a sign of both his loyalty to the party and the trust he had developed with its leaders, Liu was listed in the credits as a producer.

Later, Liu also instructed Phoenix to produce a series of flattering shows about Deng. None mentioned that Deng ordered the troops into Tiananmen.

Building the Empire

By the mid-1990s, Liu was looking to start a global, Mandarin-language television network that could rival CNN. Satellite technology made his dream possible, allowing a station to beam to a vast region for a fraction of the cost of building a regular TV network.

Rupert Murdoch's News Corp. controlled access to Asia's main TV satellite. But China had just banned the use of home satellite dishes, and Murdoch's Chinese channel was in trouble. Murdoch needed a local partner with good connections; Liu needed access to the satellite. In 1995, they formed a joint venture to take over the station and re-launch it as Phoenix.

They also gave a 10 percent stake to CCTV. "It was a symbolic gesture to show we wouldn't oppose the Communist Party," Liu said.

Even before the deal was completed, Liu recruited a team of former colleagues and made the case for Phoenix in meetings with party officials. "All these people were our friends," Wu recalled. "They said go ahead. They thought we could change that station into something useful."

The party saw Phoenix as a way to beef up its presence in Hong Kong. But Liu always had his eye on the mainland. In 1997, Phoenix introduced its first news program, referring to it as "current events" to avoid alarming authorities determined to control the news. Gradually, Phoenix added more news, then talk and commentary shows -- something virtually absent on state TV.

The strategy worked. The programs were cheap and appealed to viewers tired of the staid presentation on CCTV. In 1998, even the premier, Zhu Rongji, endorsed Phoenix by telling one of its reporters during a televised news conference that he was a fan.

Only hotels, universities and certain state employees were supposed to receive Phoenix, but residents began installing satellite dishes illegally to pick it up. Cable operators also started offering Phoenix, taking the signal from an official satellite dish and distributing it widely in violation of regulations. Government censors could still cut off Phoenix by blocking its transmission from the official dishes.

Market studies showed the channel gaining a huge following -- more than 140 million viewers -- among China's most affluent and influential citizens. Liu built on that popularity, starting a magazine and a Web site. Despite the risks, he decided to launch China's first 24-hour news station, too.

"He said China was already changing, the process had started and wouldn't stop," recalled Chui Keung, an army buddy of Liu's who became his deputy. "He said if we didn't make the breakthrough, someone else would. And if someone else did it, we'd lose a chance to make history."

The Phoenix InfoNews channel went on the air in 2001 and immediately ran into trouble. The government barred even hotels from showing it. Without viewers or ads, the station hemorrhaged more than $10,000 per day, Chui said.

As the months passed and the losses mounted, shareholders blamed Liu and called on him to close the station. But Liu kept broadcasting. Two years and millions of dollars later, he finally persuaded the government to stop blocking the channel.

Mixed Signals

Phoenix is now the channel of choice for much of China's new elite and perhaps does more to shape its political views than the party's media outlets.

It is most aggressive in its reporting of world events, and sealed its reputation as a faster, more truthful alternative to CCTV after the Sept. 11, 2001, terrorist attacks in the United States. While CCTV waited hours to report the news, Phoenix went live within minutes and replaced regular programming with 24-hour coverage.

The station is more timid in reporting domestic news, often avoiding sensitive stories that the best state newspapers tackle. But under Liu's guidance, it regularly challenges the party's control of information with critical reports and documentaries on dark moments in the party's past.

On one of its most popular shows, a commentator reviews headlines from newspapers around the world -- and slips in news that has been censored in state media. A similar show covers material on the Internet that is inaccessible on the mainland. Another program is modeled after CBS's "60 Minutes" and has probed China's AIDS epidemic and rural unrest.

But there are limits as to how far Phoenix will go, and Liu encourages self-censorship among his staff. The station covered Taiwan's elections, but never lets anyone express support for the island's independence. It also refrains from critical coverage of party leaders and avoids interviews with dissidents who call for democratic reform.

"Once Liu told me, 'Why should we make Beijing angry? Let someone else do it,' " said Chen Helin, the director of Phoenix's news channel.

Phoenix also broadcasts fluffy shows on the economic triumphs of the provinces, and several of its pundits parrot the party's views with enthusiasm. The station aired one fawning interview with the health minister just days before he was fired for covering up the SARS epidemic. It also produced a show attacking the banned Falun Gong spiritual movement.

Liu spends much of his time wining and dining party officials. In a recent meeting with his top executives, he reported on a session with a member of the Politburo. "They have high hopes for Phoenix. They hope we can do some positive reports," he told them, then suggested a few stories about the Politburo member's city.

Phoenix journalists contend that such programming makes it easier for them to get away with bolder reporting. But others say Liu simply produces better-packaged propaganda than CCTV -- and helps keep the party in power.

Liu is unapologetic, arguing that Phoenix reaches more people in China with more news than any other media organization. "There may be some things we can't report, but we won't tell lies," he said, adding that Phoenix pushes so hard that censors occasionally block its signal.

"Phoenix's relationship with those in power is the same as other people's," he said, with a hint of exasperation in his voice. "To have this democratic sound in China, it isn't easy. It's hard to survive in a crevice, and harder still to grow a tree, but that's what we're doing. . . .

"We have to treasure our position. We can't just do whatever we want."

Liu Changle founded Phoenix Satellite Television, China's only private TV network authorized to broadcast news in Chinese.A producer at Phoenix TV oversees a taping at the station's studios in Hong Kong. Phoenix broadcasts to more than 140 million viewers, among China's most affluent and influential citizens.