A brand new reappraisal by the People's Republic of China of the speed with which it can modernize its primitive economy -- resulting in cancellation or postponement of major foreign investment projects -- may appear to be a brutal, if realistic, reversal of earlier pie-in-the-sky concepts.

But it begins to make sense against the backdrop of an economic survey of China just completed by the World Bank. Many of the huge construction projects that have bombed out, like the $5 billion Baoshan steel plant in Shanghai financed by Japan and West Germany, lacked a thorough, "second indepdendent review" by a panel of experts, something that is standard practice at the World Bank. Belatedly, Baoshan and other big ventures are getting another look.

For the next two or three years of a reappraisal period, the Chinese are likely to concentrate on smaller projects and consumer needs. They probably won't bite much into $25 billion to $30 billion worth of credit extended to them by commercial banks. But -- in a matter of a few days -- there will be the first Chinese drawing on the International Monetary Fund, through a loan designed to help the Chinese economy make a basic adjustment.

The bank's survey -- not yet pubished -- probably will yield more information on China's potential and problems than has ever been available to those outside the country. Eager for help, the Chinese apparently gave the bank complete access to persons and data and let members of the bank mission travel freely throughout the country to make their own judgments.

The Chinese appear to be much more willing to listen to the critical advice as a multilateral institution on the board of which they sit than to individual governments or companies interested in promoting a piece of the action for themselves. (Parenthetically, this might offer some guidance to the Reagan administration, which has been anxious to cut multilateral aid and concentrate on bilateral deals.)

The bank's mission to China to explore where that country could use development loans concluded that expectations were too high on both sides. As a result, the bank and the Chinese government are hard at work on what they hope will be a realistic loan program, both in terms of the bank's total resources and in China's ability to handle the infusion of investment money. Initially, the concentration will be on a small number of projects in four sectors: higher technical education, agriculture, transport and hydro-thermal power.

The new sense of realism among China's leaders brings an admission that the real rate of inflation is much higher than the official 16 percent rate -- at least double that in the cities. A large percentage of the problem of high prices is chalked up to a sudden increase in both blue- and white-collar pay. And fashionably enough, the Chinse are now concerned by -- yes -- budget deficits.

There is increasing doubt that the balance-of-payments deficit can be cut substantially, mostly because there is less euphoria about oil production and therefore about potential for oil exports. The Chinse talk openly, in fact, of the possibility that oil production actually may decline in the years ahead.

The big surprise for the World Bank experts was to find that what China called a "planned economy" is even less planned than they imagined. That helps to explain how Deng Xioping and some of his eager aides got over-committed on ambitious joint ventures, notably with Japan.

For many years, the Chinse had been following a Soviet model of highly centralized planning with strong emphasis on heavy industry and low levels of personal consumption. But the caliber of planners in the commissions, layered over about 20 key economic ministries, has been -- to put it blunty -- low.

Even communications are poor, with each major mininstry operating its own little empire. For example, the coal and electricity ministries run their own colleges and universities and never even meet to coordinate what they're doing.

It's too much to expect that the Chinese system, or the bureaucracy itself, might be streamlined overnight, whatever the new resolve of officials or help received from the outside. Investment expenditures -- despite the effort of economic officials such as Vice Prime Minister Gu Mu to bring them down -- still run to an extraordinary 35 percent of GNP. As anyone who has ever visited the Canton Trade Fair knows, much of this investment is in outdated and even unsaleable heavy machinery.

It's going to take time to rein in the provinces and the local plant managers who -- in the early stages of decentralization -- are enjoying their first heady taste of the power to make decisions and spend money. The next two or three years will be rough, and especially frustrating for foreign business executives who have had to deal with seemingly whimsical ups and downs in Peking.

Close observers of the China scene like Christopher Phillips, president of the National Council for U.S.-China Trade, advise American executives to keep things in perspective. They were too euphoric early on, Phillips argues, and can get too pessimistic now.

He urges them to keep in touch and "show the flag" in visits to Peking, on the theory that nothing has disminished the longer-term prospects for the economic development of China, with its enormous base of resources, fairly sophisticated agriculture for a developing country and a masss of hard-working people.