A new day has arrived in this commune on China's central plains where residents enjoy free food, housing, healthcare, schooling - even free weddings and funerals.

As the rest of China struggles with mounting social problems brought on by two decades of turbocharged economic reforms and vanishing social safety nets, the decidedly retro Nanjie seems to have found the good life. It is the best known of a handful of villages that have returned to the country's communist past.

Its definition of the good life doesn't include what village bylaws deem ``excessive living.'' Fancy restaurants, karaoke bars, music clubs and mahjong are all forbidden. And though Nanjie is free of crime and unemployment, it is also free of all the trappings of personal freedom that are part of life for most Chinese citizens today. At work, villagers study Mao quotations and attend self-criticism sessions. To marry, they participate in a group wedding held once a year in front of a giant portrait of the Great Helmsman. Then the village buses them off to a honeymoon in Beijing - because that's where Mao lived, a villager explained.

At home they sit on identical village-issued, natural-wood-frame sofas, watch the same TV sets and tell the time on the same Mao clocks that are adorned with bright rays lighting up his face and the slogan ``Chairman Mao is human, not God. But Chairman Mao's thoughts are greater than God.''

``The only thing I had to buy myself was the microwave and these plastic tulips,'' says 57-year-old villager Wang Fenghua. Although the teachings of Mao serve as the moral compass for the 3,100 people of Nanjie, the real secret to its collective well-being is, well, capitalist: Two dozen village enterprises manufacturing all sorts of things - noodles, beer, pharmaceuticals. One even promotes ``red tourism.''

``The widening gap between the rich and the poor. Corruption. Crime. What is the root cause of all these social ills? Privatization. Our goal is to realize communism. But communism needs to make big money - only big money can make communism better.

``There is no contradiction in that,'' says Wang Hongbin, the 53-year-old village leader credited with lifting the village out of poverty by marrying communist ideals with capitalist mechanics.

It started about 20 years ago, shortly after Beijing began testing the waters of market reform by dismantling people's communes and giving individuals the incentive to create their own wealth.

The people of Nanjie also tried their hand at privatization, but they didn't like what they saw. In their view, the entrepreneurs who built factories exploited workers to line their own pockets and gave nothing back to the community.

That's when Wang decided to reverse course by persuading villagers to give their land back to the collective so they could run businesses together.

He led the village to take over the factories and re-collectivize the land. He sold the chickens at his egg farm and moved into the village flour mill to help direct operations.

Today, Nanjie is home to 26 enterprises and joint ventures and employs about 11,000 laborers, making it the wealthiest village in Henan province. But as its de facto chief executive officer, Wang is no millionaire. He makes US$30 (HK$234) a month, a sum he set for himself and the rest of the cadres in his small-town utopia. That's about what a poor Chinese farmer earns but only about a third of what an urbanite makes.

It's all part of his ``fool's'' theory, written prominently in red ink on the walls behind the village square: ``Only fools can save China.''

``China needs fools. The world needs fools,'' the down-to-earth Wang says. ``What does it mean to be foolish? Self-sacrifice.''

But Wang is also realistic. Thirty dollars is not going to get him the kind of talent he needs to run his export-driven businesses in an increasingly competitive marketplace. That's why he didn't think twice about hiring an outside brewery executive with a PhD at an annual salary of US$60,000.

His adaptability is supported by another of his beloved slogans: Wai yuan nei fang, or ``Circle on the outside, square on the inside.''

The circle refers to the flexibility of the market economy and the square is the dogma of communism. Their coexistence represents the ``third way'' that allows Nanjie to hold on to Maoist nostalgia without rejecting the benefits of capitalism.

``I hate capitalism. But I have to face reality,'' Wang says. ``Communism is our highest ideal. It will never go out of style.''

Style is another factor that sets Nanjie apart. A typical Chinese village consists of a cluster of weather-beaten stone houses or mud huts surrounded by open fields where each family tills a small plot. In that sense, Nanjie is not really a village at all. With its neat rows of factory buildings and low-rise apartment blocks, it looks like a modern industrial park, or at least a suburban factory town far from any farmland.

Only about 70 of its villagers still work in agriculture, and that's with tractors on a large collective farm, not water buffaloes on tiny individual plots.

The streets are broad, spotless and billboard-free, but they are eerily empty, giving Nanjie the feel of Pyongyang, the North Korean capital. No one can own a vehicle, so the only cars or motorbikes that pass through are from neighboring towns.

The few stores sell mainly Nanjie-made products, such as instant noodles, cookies, beer, wooden combs and, of course, rows and rows of Mao memorabilia.

For former peasants who earned next to nothing plowing the land, the village code of conduct that forbids keeping a messy house and speaking behind people's backs is a small price to pay for cradle-to-grave welfare.

``No one is happier than us,'' says Li Ruiyu, 57. ``We get three pounds [1.5 kilograms] of meat a week, and it's more than I can eat. When we get sick, they pay our bills no matter how much. When we die, all the village leaders attend the funeral and pay for the cremation and a box. What else can I ask for?''

Although the Nanjie version of socialism has been copied by a handful of villages around the country, experts say it's hard to imagine the idea reproduced on a large scale.

``For China to go completely back to a collective economy, that's impossible,'' says Zhong Dajun, an independent analyst based in Beijing. ``It doesn't mean it can't exist on a smaller scale. But their future depends on how well they manage the village enterprises and whether they can keep themselves from being contaminated by the outside world.''

There are already some signs of trouble. Factory earnings have been falling from their peak in 1997. Cash-flow problems have led to work stoppages at some factories. During a recent visit, two noodle facilities were idle.

But for many residents, the experiment cannot afford to fail.

Most have nothing in their bank accounts (the village discourages saving money) and everything to lose if the collective goes bankrupt. Last year, Nanjie turned to red tourism as a new cash crop. An estimated 400,000 people are said to visit each year for study tours, and the village has begun charging them.

Not all visitors are believers. Consider the look on the faces of a group of college students as their guide explains how her village succeeded in wiping out all private possessions.

A collective gasp fills the room.

``I wouldn't want to move here,'' one 19-year-old student says. ``It's too far removed from reality.''