By NICHOLAS D. KRISTOF

GRESIK, Indonesia -- Doni Setiawan leaned over the pot of boiled corn cobs that he was selling on the street and steam swirled around his flashing eyes as he argued with his buddy Sarpin.

It was a triumphal moment for democracy, the first time the two friends had ever felt free enough to discuss national affairs openly. Yet the topic they chose to discuss as they exercised their new right of free expression was this: Should Indonesia expel all citizens of Chinese origin?

"We're really being monopolized and colonized by the Chinese," declared Setiawan, 27, who was hovering over his pushcart on a bustling street in this city 400 miles east of the capital, Jakarta.

"The Chinese should be kicked out! Then we would be freed of them forever."

Sarpin, 34, thought that was too extreme. But after more discussion he nodded his head.

"Yeah, they do treat us like slaves," Sarpin reflected. "I guess the Chinese should be kicked out."

The exchange captured the volatile mood in Indonesia these days: exultant at the overthrow of President Suharto a few days ago, exuberant at the expectation of new freedoms, and pregnant with dangers. There are plenty of signs that Suharto's resignation on Thursday marked not just the end of a tumultuous roller coaster ride but also the beginning of a new one.

The triumph of a form of "people power" in Indonesia raises critical questions about what kind of country the people seek. The answers are unclear, but conversations with dozens of people here suggest that a democracy might be less tolerant and compassionate than the dictatorship was, and that a democracy might allow an outlet for the hatreds lurking among poor workers and peasants.

No one place can fully capture the patterns of an entire country like Indonesia, but this city seems a fairly typical window into the restive national soul. An old trading port of 720,000 people on the northeast coast of the main Indonesian island of Java, Gresik -- like most places in Indonesia -- has not been the scene of any violence so far and is simply one more Indonesian hub where peasants come to sell vegetables and buy sarongs.

In Gresik, as in most cities, most Indonesians tend to live in cramped houses or shacks with dubious plumbing, while the small minority of ethnic Chinese often live in mansions with satellite dishes in the yards. Ethnic Chinese account for less than 3 percent of Indonesia's population of 210 million but control perhaps half the economy.

Suharto emphasized ethnic and religious harmony and strictly forbade hate-mongering, so the news media never gave an outlet to the bitterness that many poor, uneducated workers and peasants feel about the Chinese.

Now, if political freedoms come to Indonesia, one possibility is what has been called an "illiberal democracy" -- a system where the majority rules and decides quite democratically to oppress a minority.

If Indonesia becomes more democratic, policy-making may be based not on the considered views of the cosmopolitan ruling class in Jakarta but on the simmering anger of people like Arudji Sutanjo, a 38-year-old small-business man.

"Our blood will never mix with Chinese blood," Sutanjo said earnestly over coffee in his living room. "Actually, we hate the Chinese, but we couldn't do anything about them before, because they were protected by Suharto. But I don't think they will be protected anymore."

"We should send all the Chinese men back," Sutanjo said in a genial tone. "The women can stay and marry Indonesians, and then the Chinese race here will disappear.

"And if they convert to Islam, then they can stay because they will change. Because Chinese who convert do not act like Chinese. They are not arrogant, and they do not swagger."

It is difficult to gauge how many people think this way, because just a week or two ago it was a forbidden topic. Now, the press has become more open, but nobody knows what the rules are.

Just this weekend, Indonesia's leading newspaper, Kompas, suggested in the course of a long article that the taboo on public discussion of the Chinese in Indonesia should be lifted. It also quoted Probosutedjo, a leading Indonesian businessman who is Suharto's half-brother, as urging that a new legal structure be established to discriminate against ethnic Chinese in business.

Attitudes toward the Chinese seem to be hardening because of the nation's economic distress. Here in Gresik, people complain about the rising prices with more passion than they discuss the fall of Suharto.

"My expenses are up, because I'm staying at a place where I can't cook and I have to eat street food, and the prices have gone way up," complained Muri, 38, who runs a portable arcade. He carries around a duffel bag full of electronic games and charges children the equivalent of a penny to play for five minutes.

"I have fewer customers now," Muri added bleakly. "Maybe that's because parents are giving their kids less pocket money."

Indonesia already has some of the most racist laws anywhere in the world, all directed at the Chinese minority. Chinese-language schools are banned, Chinese-language materials are forbidden, and it is illegal to celebrate Chinese New Year.

Any further tightening or expulsion is unlikely in the immediate future. Indonesian politics are still dominated by an educated and relatively tolerant elite, and the likely contenders for president have never given signs that they might seek to exploit Indonesia's racial issues.

A Muslim leader, Amien Rais, may eventually emerge as president, and he would represent a dramatically different style from the secular leaders of the past. But Rais has never tried to exploit racial animosities; on the contrary, he is a sophisticated moderate with a Ph.D in political science from the University of Chicago.

How Indonesia handles these issues will be enormously important for all of Asia. Few analysts believe that China would ever intervene militarily to protect ethnic Chinese in Southeast Asia, but Chinese minorities are also resented for their economic success and supposed arrogance in countries like the Philippines and Malaysia, and the only place where they have really assimilated successfully is Thailand.

Among ordinary Indonesians, opinions about the Chinese range widely. While many in Gresik said that they thought that the Chinese should be expelled, there were also people who boldly expressed the opposite view.

"Chinese are Indonesian citizens, too," said Agus Supriono, who works for the power company in Gresik, as he sat on a stool in front of a hardware store and disagreed with a half-dozen of his friends who had just railed against the Chinese.

"If they are good citizens, they are OK with me. After all, they contribute to the economy as well."

"I'm against putting restrictions on them, against expelling them," Supriono said, as his friends listened intently. "In Islam, there is nothing about treating races differently. We should treat everybody the same.

"But if there were a vote on expelling the Chinese," Supriono added sadly, "at least 75 percent of Indonesians would vote yes."

Of course, it is far from clear that Suharto's downfall will lead to the kind of democracy that will empower ordinary workers and peasants. There may be a military coup, or the educated ruling elite may continue to run the show under some authoritarian system.

While people are getting used to the idea that a dictatorship may be ending, they seem profoundly unsure what kind of country they want. Some speak of their desire to introduce Islamic law or even create an Islamic state, noting that 90 percent of Indonesians are Muslims. Others yearn for Western-style democracy and the rule of law. Yet others prefer

a more authoritarian model, saying that they are wary of the chaos of democracy and the introduction of too much freedom.

"I don't like the American system at all, not at all" said Kumala, an unemployed 19-year-old who graduated from high school last year. "Americans are too free," she added. "They do not follow religion very much. And they have free sex."

Whatever political system is on the horizon, the age of strongman rule seems to be on the wane, and even a new dictatorship might have to be more responsive to public sentiment. Thus one possibility may be new restrictions on Chinese businesses, perhaps modeled on the laws in Malaysia that help indigenous people at the expense of Chinese.

Even those in Gresik who did not like the idea of expelling the Chinese seemed to favor new laws to restrict their business influence.

"Expelling the Chinese might work, but I don't know," said Ramsiana Kasuma, a 20-year-old college student. "My neighbor is Chinese, and she is very kind and gets along with us well. So I wouldn't want her sent away.

"Maybe we should just put restrictions on the Chinese so that they do not dominate the economy."

One brake on any efforts to expel the Chinese or confiscate their wealth is that it might be catastrophic for Indonesia as a whole. East African countries like Uganda expelled ethnic Indians in the 1970s because they had dominated business and were bitterly resented. But the exodus shattered the local economies.

The most important Chinese-controlled assets in Indonesia are not the physical buildings they own but their contacts and business savvy. In a modern economy like Indonesia's, any move to drive away Chinese businesses would send the stock market and currency tumbling and would harm almost everyone.

The attitudes toward Chinese are varied and complex, not loathing so much as smoldering resentment, and all are sprinkled with a grudging respect. When a visitor asks why the ethnic Chinese are invariably much richer than the Indonesians around them, the answers are often surprisingly straightforward.

"They work harder," said Sumayah, a 36-year-old housewife. "In a Chinese family, you see the mothers working, the kids working, everyone working."

"Sometimes we feel jealous," she added. "We think, why are we Javanese below the Chinese?"

Mrs. Sumayah's husband emerged from the doorway and laughingly interjected: "Sometimes? We don't feel jealous just some of the time. We feel that way all the time!"

Most Indonesians in Gresik said that Chinese prosper because they are better at business than other people and work harder. But some also insisted that Suharto favored the Chinese.

It is true that some prominent Chinese tycoons are close to Suharto and were given monopolies that helped them prosper. But most Chinese in Indonesia struggle against acute discrimination -- in Gresik, for example, the town center has a large market with countless stalls, but ethnic Chinese are banned from operating in that market.

Religious tensions are overlaid on the ethnic division, for Indonesians are mostly Muslims while many of the Indonesian Chinese are Christians. Some Indonesians complained that the Chinese are trying to build too many churches, or are trying to show up the Muslims by building fancy new churches next to old mosques.

"The Christians are over-expanding and taking advantage of religious freedom," complained Sutaryo, a 27-year-old worker in a petrochemical Still, many Indonesians here speak fondly of individual Chinese even as they complain about the Chinese as a class. On one street in Gresik, the townspeople spoke glowingly of the Chinese Christian pastor, Petrus Riady, whom they have elected as head of the neighborhood. Last week, when there was talk that there might be rioting against Chinese, the neighbors set up a 24-patrol around Riady's house to protect him.

"I was very happy about that," Riady said as he sat in the entrance to his modest house. "There may have been some riots elsewhere in society, but there are many nice and kind people as well."

One sign of progress, of a sort, is that in the upheavals of 1965-66, when Suharto pushed out his predecessor, Sukarno, and seized power, thousands of Chinese were killed in an explosion of popular rage. In recent months, there have been anti-Chinese riots in many cities, but the pattern has been for Indonesians to loot Chinese shops but not to assault the Chinese themselves.

"If the government doesn't solve the economic crisis, the next time the riots will be even worse," said Imam Riyanto, a 37-year-old college graduate who does odd jobs. "Even so, while people would take things and burn the shops, we wouldn't actually hurt the Chinese."

Riyanto had said a moment earlier that he favored the introduction of Islamic law, including amputation of a hand for stealing. But when he was asked whether the looters in the riots should have their hands amputated, he shook his head.

"No, that's a different situation," Riyanto said. "The looters took things from Chinese, not from Indonesians."

All this leaves the Chinese shopkeepers in Gresik jittery about the risks of renewed upheavals.

"We're afraid it could be like it was 30 years ago, and so we have to be very careful," said a 58-year-old Chinese shop owner who insisted on not being named. "We have a lot of Indonesian friends, and our neighbors around here wouldn't bother us. But if there are riots, you never know what strangers might do."

In recent decades, Chinese have tried harder to fit into Indonesian society, so hard that most young people speak the Indonesian and Javanese languages, but no Chinese.

"Older folks are sad about that, of course," the shop owner said, speaking Mandarin with a strong Javanese accent.