Reagan administration officials yesterday defended their new survival-of-the-fittest trade policy for financially troubled industries that previously had looked to the government for help.

U.S. Trade Representative William E. Brock, in testimony before a joint hearing of Senate subcommittees, said that although the government will continue to enforce existing trade laws aiding U.S. firms, "Competition is the most healthy arrangement. It's not the business of government to protect against failure."

Brock and Commerce Secretary Malcolm Baldrige responded to questions about the administration's long-awaited white paper on trade policy that was released on Tuesday. The policy paper was the administration's first attempt to devise trade guidelines since its controversial decisions urging quotas on imports of Japanese cars to help U.S. automakers and providing no assistance to the domestic shoe industry. Some lawmakers said those two decisions left them confused as to the direction of the administration's policy.

The question of government aid for faltering industries became prominent with the financial troubles of Chrysler Corp. and pleas for relief from imports by the steel, shoe, color television and auto industries.

Baldrige summed up the new policy as one seeking reciprocity between trading partners and free trade. Brock told the subcommittee, "The most important thing to do for individual firms is to have a healthy total economy."

"Our policies toward the adjustment [of faltering industries] will take into account the fact that the economic vitality of certain sectors of our domestic economy is clearly essential to national security," the white paper said. "Where other nations have a natural competitive advantages, U.S. industry must either find a way of upgrading its own capabilities or shift its resources to other activities.

"Adjustment assistance and safeguard measures can ease problems of dislocation for firms and workers, but they do not of themselves effectuate adjustment," the policy paper continued. "It is U.S. policy to place primary reliance on market forces to faciliate adjustment in affected industries."

Former U.S. trade representative Robert Strauss testified that trade shouldn't be conducted under broad policy statements but on a case-by-case basis. "You have to look at what is the cost and what do you get for it," Strauss said. One of the worst mistakes the administration can make is to apply "general rules or broad philosophical goals," he said.

The United States should strive for open markets "but you don't need to be a patsy," Strauss added.

In another trade area, the Commerce Department yesterday released details of the administration's liberlized policy of exporting high technology with potential military uses to the People's Republic of China.

The new policy will include a "presumption of approval for products with technical levels twice those previously approved," Commerce Deputy Secretary Bo Denvisk told the National Council for U.S.-China Trade. Export licenses for more technically advanced products will be considered individually, Denysik said.

The new regulations eliminate interagency review of special export licences that don't need clearance by NATO allies. The Chinese had complained that some of their purchase requests for sophisticated computers needed for next year's census were delayed by the U.S. bureaucracy.