When Communist China?s parliament passed a landmark amendment to the constitution to protect private property on Sunday, the late US Secretary of State John Foster Dulles may have been smiling in the heavens.

Dulles, who once refused to shake the hand of Chinese Premier Zhou Enlai, predicted in the 1950s that China would undergo ?peaceful evolution? ? the gradual undermining of communism by Western cultural, commercial and ideological values ? under the watch of its third or fourth generation leaders.

The fourth-generation leaders, headed by President and party chief Hu Jintao and Premier Wen Jiabao, are charting a course that will make China communist almost only in name, protecting private property and letting capitalists join the party.

Third generation leader Jiang Zemin, who yielded the top party post to the younger Hu in 2002, first cracked open the party doors to private entrepreneurs with his ?Three Represents?, which called on the party to embrace more than the proletariat. Parliament has just enshrined that theory in the constitution. But Dulles was only half right.

China?s communist leaders are fighting to keep the party relevant while preserving their hold on power in the face of an array of threats that could undermine one-party rule. ?It?s... moving towards the complete collapse of communist ideals,? said Geremie Barme, a China expert at the Australian National University. External factors are a headache.

Taiwan may this weekend re-elect pro-independence President Chen Shui-bian, ushering in four more years of tension. Democracy has become a demand in Hong Kong, where September elections could bring more defiant lawmakers.

On the domestic front, they are struggling to create more jobs for workers and cut taxes on farmers, as a widening wealth gap threatens to spark unrest.

The changes would have been unthinkable just 15 years ago, when protesters clamoured for more democracy on Tiananmen Square. ?As long as they ensure and strengthen the leadership and the supremacy of the Communist Party, any reform can be justified,? Barme said. Second-generation leader Deng Xiaoping set the ball of market reforms rolling in the late 1970s to free the world?s most populous nation from the shackles of poverty. Now it appears increasingly to be throwing off communism.

Fifty years after waging bloody campaigns against capitalists and landlords, the party wants to be everything to everyone. ?The Communist Party will no longer be the vanguard of just the proletariat,? said one Beijing-based ambassador. ?It will also represent bankers, entrepreneurs and land owners.?

The milestones follow a year in which Hu and Wen weathered a crisis over an oubreak of the deadly Severe Acute Respiratory Syndrome and huge pro-democracy protests in Hong Kong. Hu, who marked his first year as president on Monday, has slowly consolidated power but remains in the shadow of his predecessor Jiang, who remains military commission chairman.

While hollowing out core communist principles, Hu and Wen at the same time have championed the weak, the have-nots and the proletariat by cultivating a man-of-the-people image. Jiang, by contrast, welcomed private entrepreneurs with open arms but had little time for workers and peasants.

But for Communists to embrace capitalism requires caution, and Hu and Wen have taken steps to allay fears among hardliners that reforms will erode the party?s grip on power. A month after taking over the party, Hu made a pilgrimage to the Xibaipo revolutionary base near Beijing in December 2002.

A year later, Hu heaped praise on late party chairman Mao Zedong to mark the first-generation leader?s 110th birthday. Wen invoked Mao twice at his annual news conference on Sunday. ?Hu worshipped Mao to reassure party members he will not change his colour,? said a Chinese political analyst.

Hu and Wen have experimented with limited political, media and judicial reforms and tried to make the party more transparent and accountable as part of efforts to curb widespread corruption.

The government also overturned legislation that gave police sweeping powers to detain vagrants without due process after a university graduate without proper residency papers died in police custody, sparking widespread outrage.

Signs are emerging of a gentler administration but change is incremental, constrained by an overriding desire for stability. China has executed fewer criminals and freed outspoken government critics, steps unthinkable during Jiang?s rule. But dozens more cyber dissidents and pro-democracy activists have been rounded up and calls by liberal intellectuals for political reform have been ignored.

Rule of law has become a watchword in an age when finding a catchy slogan encompassing communism and capitalism is almost impossible. ?Mao Zedong?s legacy was class struggle. Deng Xiaoping?s legacy was reform and opening up. Hu and Wen want to be remembered for system making,? said Chinese political analyst Liang Kezhi.