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BEIJING--The blind man in a frayed cotton jacket stood on the sidewalk, hawking cheap plastic shopping bags without much success to shoppers who scurried past. The man, Li Bohui, forty-three, was trying to supplement the $30 he receives each month for his years of service in a failed state-owned brush factory.

China's drive to wring out money-losing state industries has been hard on many workers, but perhaps roughest of all on people with disabilities, like Li. For decades China has employed many disabled people in subsidized "welfare factories," where they worked at simple tasks for modest salaries. In a country that rarely provided welfare payments to anyone, this allowed the disabled to earn a living of sorts.

But now that system is collapsing because few such companies have been able to compete in the emerging market economy. As a result hundreds of thousands of people with impaired vision or hearing, paralyzed limbs, or other disabilities have lost jobs.

"The economic problems have hit the disabled much harder than the general population," said Zhou Yongshen, a sociologist with the Beijing Academy of Social Sciences. The government's new strategy is to integrate the disabled into the mainstream work force. But these efforts are running up against a cultural legacy of discrimination and neglect.

Like other laid-off workers, the disabled are supposed to continue receiving small subsistence payments from the companies where they worked. Experienced only at welfare factories, their education usually minimal, the middle-aged disabled have little prospect of finding new jobs.

"When I was young, it was hard to get any schooling," said Li, explaining why he turned to peddling. "I think it's much better for younger people today if they can get an education and a trade."

Across town at the Beijing School for the Blind, nineteen-year-old Wang Xiuming is one of those younger people, gaining a skill that represents the latest push among advocates for the blind.

Along with many of her classmates and hundreds of other young blind people around the country, she is studying therapeutic massage--an ancient tradition in Chinese medicine that is increasingly being taken over by blind masseurs trained at special institutes for work in hospitals, clinics and hotels.

Tens of thousands more of China's blind people already work as masseurs--most of them illiterate and lacking the advanced training provided by this Beijing school, perhaps offering their services in beauty parlors or along roadsides.

Preparing young blind people to become medical masseurs or, second in popularity, piano tuners, is seen by officials and students here as a step forward, offering the chance of more independent careers.

"I thought about many occupations," said Ms. Wang, "and I decided that this one was suitable for me."

But the channeling of bright blind students into these "appropriate" professions also shows how far China remains from bringing disabled people into the mainstream, a goal sought more avidly in the United States and other Western countries.

In the late 1980's the concerns of the disabled began receiving serious attention here as Deng Pufeng, a son of the late leader Deng Xiaoping, helped create a national federation that he still heads. Deng's legs were paralyzed years earlier when, facing persecution in the Cultural Revolution, he jumped out of a window. Now Deng, who uses a wheelchair, is a well-connected advocate for greater opportunity for the disabled.

Most disabled children in cities now receive the universally required nine years of schooling with special help if needed. But in rural areas, where there are no funds for special schools or classroom helpers, many still do not get a basic education.

In part because of the lack of funds, in part because attitudes toward them still tend to range from paternalism to disdain, disabled Chinese have only slowly entered universities and professions. An anti-discrimination law was enacted in 1991, and progress has been greatest for those with physical problems such as paralyzed legs; hundreds of such people have attended university.

But blind people still are kept largely in separate domains, and even today, officials at the Beijing school say, few if any blind students are attending ordinary university classes anywhere in China.

One reason is that China lacks the money for widespread introduction of computerized speech synthesizers, which are increasingly used by the blind in schools and workplaces in the United States. The Beijing school is experimenting with computer techniques but is also developing its own college-level course in medical massage.

The welfare factory system had been developed on a large scale in the late 1950's, when everyone was expected to help build the new socialist state. In recent years tens of thousands of these factories have employed about one million disabled people doing everything from folding book pages to making match boxes or toys.

Now the government is pursuing integration by trying to require all companies and institutions to hire some disabled people. In the mid-1990's in Beijing and eight other cities, trial efforts began to require companies to hire at least one percent of their workers from the disabled, with fines for noncompliance.

"The intent was good, but so far these policies have not been very successful," said Zhou, the sociologist, who has studied the program. Over a recent two-year period in Beijing, only about 400 disabled people got jobs through this policy, he said, "and if that sounds bad, in Shanghai over three years only 100 people got work that way."

Smaller firms see the requirement as a hardship, Zhou said, while larger, successful state enterprises often find it easier to pay a fine than to comply. Government offices often do not follow the guidelines, and Beijing's ten major universities at first applied to be exempted on the grounds that they had many overseas guests and scholars and were worried about maintaining their image.

Blind people, with their special educational needs such as Braille, still usually attend separate schools here. The training programs in massage and piano tuning are opening up new opportunities, if stereotyped ones.

At the Beijing Massage Hospital, an advanced center for traditional medical massage that offers treatment for a wide range of orthopedic ailments and pains as well as some internal diseases, thirty-one of the forty-six massage professors are blind.

One of them, Zhou Jianzhong, who is forty and attended the Beijing School for the Blind, said many of his old classmates who had entered welfare factories had been laid off and were now trying to learn massage along with the younger generation.

"I think this is well suited to blind people," he said of massage. "It's safe, you don't have to be highly mobile, and they tend to have a good sense of touch."

"The Chinese trust blind people in this job," he said. But finding good massage jobs is getting difficult too, he added.

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