A young dissident in Beijing recently decided to sue a senior Chinese official over what he said were untrue statements about his private life.

Rather unusual, you might think. What made it even more so was the fact that the dissident was in prison at the time, on charges of attempting to overthrow the government.

Some weeks later, his wife was pleasantly surprised to see the official in question - a member of the Human Rights Institute, a quasi-government body - issue a statement of apology to the dissident's family for any embarrassment caused. The dispute was settled.

The idea of a jailed dissident daring to issue a court challenge against a senior official, then receiving not further punishment but an apology, is a far cry from the era of Mao Zedong. It is a sign of the changing times in China.

The roots of pragmatism

When Chairman Mao died in 1976, China was in economic ruin, ideologically bankrupt, internationally isolated and ruled by a regime whose popular support was weakening.

Deng Xiaoping focused on achieving economic growrth

When he took over power, Deng Xiaoping's solution was simple: fast economic modernisation and market liberalisation under a monolithic political system.

In other words, an experiment in capitalism led by a communist party.

The unlikely combination was a result of Deng's almost naked pragmatism. He was injecting common sense into Chinese politics and decision-making.

The new approach was immortalised in his phrase: "It doesn't matter whether a cat is black or white as long as it catches mice".

It is hardly surprising that this philosophy soon emerged as the most popular consensus in post-Mao China. Along with it came the proposition that the lives of ordinary Chinese be normalised after years of striving for political utopia under Mao.

Not the state's business

In the West, the story of China's last two decades is largely dominated by two themes.

First, economic success and market potential, and second, political oppression, in the shape of crackdowns on dissidents, church groups or practitioners from the Falun Gong sect. But while it is important to pay attention to what is decreed from behind the walls of Zhong-nan-hai - the Forbidden City - where China's top leaders work and live, some of the biggest changes are taking place at the grass roots of Chinese society.

The mechanisms of Stalinist state control, such as the household registration system, the work-unit system and ideological indoctrination, have been greatly weakened.

A Shanghai car worker

There is increasing separation of the state from the private life of the individual.

People have more freedom and scope for basic choices in their lives than ever before - as long as they do not openly challenge the Party and its legitimacy.

Their private lives are no longer the business of the state.

People are no longer prosecuted or demoted for adultery. Homosexuality, condemned in the past as a social evil, is now out in the open.

The new middle class

Ordinary Chinese can now afford to be indifferent to the party's political demands.

As politics has become increasingly irrelevant to people's livelihood, they have become preoccupied with more everyday concerns such as their children's education, health, housing, career, pension, or which clothes to wear on their first date.

With this change has come the emergence of a middle class and its increasing importance in public life.

The members of this new middle class are young or middle-aged professionals, often managers, entrepreneurs or intellectuals.

They are well-educated, well-informed about the West and acutely aware of the problems facing China.

Most of them would not go in for overt political dissent, but they are certainly not afraid of being independent or even critical of government policies in their own areas of expertise.

In recent years, they have initiated and contributed to debates on contentious issues such as constitutional democracy, private ownership, rising unemployment, environmental problems and the one-child family planning policy.

Family matters are no longer the business of the state

They have become opinion formers on issues of public concern and set trends in civic and cultural life, from tourism and the arts to sex education.

Typical of these new-found middle class preoccupations is the desire on the part of every major Chinese city to build its own world-class opera house.

Auction houses have flourished, museum-going has become fashionable, and 'How to...' self-improvement books are best-sellers.

These quintessentially bourgeois pursuits, promoted by the newly-arrived middle class, are part of the normalisation of everyday life.

They are contributing to the formation of a civil society in China.

Suits and ties

The Party itself, meanwhile, has abandoned most communist doctrines, with the notable exception of the one-party political monopoly, the last bastion of communist power.

Culture and entertainment are high priorities for the middle classes

Few top politicians nowadays are genuinely interested in defending Marxism.

They are exercised more by specific polices than ideological purity.

Even avowed leftists, opposing economic reform and rapprochement with the West, now wear western suits and ties.

Nationalist feelings may have been running high in the aftermath of the Nato bombing of the Chinese Embassy in Belgrade, but a hand-shake between President Jiang Zemin and President Clinton a few months later put the disastrous incident behind them.

The episode did not appear to have any impact on the lengthy queue at the visa section of the US Embassy in Beijing.

Such pragmatism in foreign relations would have been inconceivable under Mao.

Freedom and its limits

At the Shanghai Opera House, a landmark building and source of national pride, leaders and citizens alike seem perfectly at ease with the combination of French design, German construction, a Japanese stage and American acoustics.

There are, though, boundaries to this new openness and freedom. The emerging civil society still has severe limitations - notably the lack of any significant development in political freedoms.

This could make existing social tensions worse, as unemployment rises, the disparity between town and country widens and public discontent at corruption and social injustice grows.

At the dawn of the new millennium, China has entered another crucial stage in its development.

It must embrace a society that goes beyond the marketplace and one-party rule.

Only by doing so will it be able to establish itself as a genuine civil society.