"This is kind of like a promotion," said [Zhang Rongde], a tall, rugged man who moved to this city of 470,000 from the southeastern province of Fujian. He said he never took advantage of his status -- "I'm a law-obeying citizen," the 63-year-old former soldier declared -- but some of the 60 investors in other ventures who received the honor did.

"I understand that Qinyang needs external investments," said Bai, whose Swan PVC Profile Co. is planning to spend $25 million to expand its factory in town. "But it's unnecessary to violate the law. This will cause many troubles."

What happened in Qinyang stems in part from China's unwritten policy of "development as absolute," said Hu Xingdou, an economics professor at the Beijing Institute of Technology. "Officials didn't regard as important the damage of this policy to the government's image as well as to the legal system." But now, Hu said, the central government is cracking down.