IT IS LUNCHTIME in the big city. Swollen by hundreds of thousands of commuters from neighboring towns and prefectures, many of the 11.5 million inhabitants of Tokyo are competing for a quick meal -- a slurp of soba at the noodle shop, a bite of raw tuna from the sushi bar, or perhaps a morsel of barbequed eel over hot rice, or even a Big Mac. And here in Kanda, in the heart of Tokyo, is the center of Japan's publishing industry, a district surrounded by prestigious universities and adjacent to the financial district, a place where students, businessmen and office workers on their lunch breaks browse elbow to elbow in more than a hundred bookstores -- big, small, old, new -- along and near Jimbocho street.

At the entrance to one bookstore is a poster printed boldly in English: "Knowledge Is Power." The significance of these words is quickly apparent as you enter the nearby eight-story Sanseido building, one of the many mega-bookstores in Tokyo. It is not just the size but the scope of the store that amazes: six floors of books -- plus a caf,e, restaurant, optician, stores that sell video, educational tapes and word processors, and lecture halls for visiting authors. The total number of books in stock at Sanseido is over a million.

The browsers seem mesmerized reading the Japanese editions of such American magazines as Scientific American, Newton, Omni, Nature, Science, Playboy, and Penthouse, along with hundreds of Japanese publications. (There were over 20,000 different Japanese magazines published in 1984, 3,626 of them for mass distribution.) In the book sections they are leafing through translated editions of Chrysler chairman Lee Iacocca's autobiography; Edward A. Feigenbaum and Pamela McCorduck's book on computers, The Fifth Generation; or Ezra Vogel's Comeback: Building the Resurgence of American Business, published in Japan five months before its American publication.

Upstairs in the foreign language section, many of the books published recently in the United States are already available. There are Japanese readers who prefer to read the English edition, which is not very surprising, for the study of English is required here from junior high school onward. On the sixth floor, college-bound students are lining up to purchase textbooks and "how to" books on the study of English. The English conversation tape featuring Orson Welles is a current hot seller. American Books to Japan

THE PROBLEM with America is that the country is too complacent with being number one," said Kiyoshi Asano of the Tuttle/Mori Agency, the biggest buyer of American publishing rights. "Part of the problem is that Americans don't have enough interest in Japan beyond the geisha, samurai, Mt. Fuji, and such other exotica. Add to that the fundamental problem that there are only a handful of Americans who can read Japanese," he said.

"But look at this," he said, pointing to some of the thousands of books that his agency has brought to Japan and sold to various publishers. Nearby lay copies of Douglas Hoftadter's Godel Escher Bach: An Eternal Golden Braid, Gloria Steinem's essays, Frederick Forsyth's The Fourth Protocol, Dan Kiley's The Peter Pan Syndrome, Gerald K. O'Neill's The Technology Edge: Opportunities for America in World Competition, and David Halberstam's End of the Road, a report on America's car industry.

"I feel the Japanese reading audience has overcome the barrier of foreign names and foreign settings," said Tom Mori, head of Tuttle/Mori. "Translations of thrillers and mysteries, for example, are competing with the very best Japanese books in those genres. It is no longer difficult for the Japanese to imagine the setting of Glitz by Elmore Leonard, for example. The Japanese have seen Miami on television or in magazines." His agency handles approximately 1,500 book contracts from abroad per year. (Some other agencies that handle foreign rights are Japan Uni Agency, the English Agency and Motovun Tokyo.)

According to Shuppan Nenkan (or Annual Publishing Report), there has been a steady increase in the publication of new titles in Japan: from 20,446 in 1973 to 32,357 in 1984. Translations of foreign books into Japanese amount to about 10 percent of those totals. Japanese Books Abroad

THE JAPAN Foreign Rights Center is a modest operation with enormous ambitions. Headed by two women, Akiko Kurita in London and Yumiko Bando in Tokyo, it is in the business of selling Japanese book rights abroad. But the two women confront a formidable barrier -- that of language.

"There are very few readers of Japanese books abroad. At the initial stage, publishers need to know what books are available in Japan and they need to verify if the book is marketable in the United States by reading the book," explained Bando. "But there are very few who can read in the original Japanese, which often means the agent selling the rights has to hire a translator. If the book is rejected, it is the Japanese publisher who must undertake the translation cost and not many are willing to do that." They have often resorted to brief English descriptions of books but "that isn't adequate in many cases," said Bando.

Japan Book News, published twice a year by the Japan Foreign Rights Center, is the firm's way of extending a bridge over the linguistic chasm. Written in English, with advertising support from many Japanese publishers, the booklet provides information on the current publishing scene and introduces contemporary authors famous at home but virtually unknown abroad. It has introduced a few books on politics and technology, but so far the emphasis has been on literature and children's books. "It's a labor of love," explained Bando. "We sent out 3,000 copies of the first issue and we only received 50 subscription requests." One Writer's View

INTEREST IN JAPAN from overseas begins with economic affairs and filters down to cultural subjects, but literature doesn't seem to be among them," said Shusaku Endo, the novelist (Silence and The Samurai) who is also president of P.E.N. Japan, the local branch of thee International Association of Poets, Playwrights, Editors, Essayists, and Novelists. "Even if someone wanted to read up on contemporary Japanese literature, there aren't many translations available," he said.

In a recent speech at the University of California in Berkeley, Endo had ranked himself as "number 16 on the list of Japan's finest contemporary writers. "I wanted to make the point that better writers than myself have been ignored abroad for the simple fact that no one has translated their work."

Endo is one of the luckier Japanese writers; his novels have been translated into a dozen languages, and thanks to Peter Owen, his London publisher, and a handful of translators who admired his work, he has become one of the few contemporary Japanese writers with an audience outside Japan. The works of Yukio Mishima, Junichiro Tanizaki and Yasunari Kawabata are available in the United States and are still being read, but these writers, along with Kobo Abe, had the good fortune to be discovered by a Japanophile editor at Knopf, the late Harold Strauss.

Endo is currently compiling a list of contemporary Japanese books that includes not just fine literature but popular novels and mysteries. From P.E.N. and other private sources, he has collected enough funds to endow two scholarships annually, with the stipulation that the winners must each translate one Japanese book into another language. Front Page Book Ads

IN A SYMPOSIUM titled "Will Books Survive?" (in the August issue of Harper's magazine), one of the participants, Philip M. Pfeffer, an executive of an American book distribution company, said, "The decline in literacy in the United States is a problem, but our biggest problem is that we haven't found a way to let consumers know what's available." In Japan, that problem has been partially solved with the help of mass circulation newspapers. Japanese newspapers continue a long tradition -- begun before the Second World War -- of displaying book and magazine advertisements daily across the bottom of the front page. Such giants as the Yomiuri Shimbun, with a morning edition circulation of 8.8 million (4.7 million for the evening edition); Asahi Shimbun, 8.2 million; Mainichi Shimbun, 4.3 million; and Nihon Keizai Shimbun, 2.9 million, follow this tradition daily in both morning and evening editions). "Newspapers are very careful about choosing what book or magazine ds should appear on the front page, rejecting those that are too ideological or sensational," said Yoichi Funabashi, Asahi's Washington correspondent. There are other book advertisements inside the daily papers and they usually outweigh book reviews in terms of space taken. Consequently they play a large role in informing the public what new books are available.

Novels are serialized daily in almost all major newspapers. The current Japanese bestseller, Donau no Tabibito, ("The Danube Traveler") by Teru Miyamoto, was originally serialized in the Asahi Shimbun. In fact, many novels begin as serials and are later published in book form. Magazines and Awards

THERE ARE over 50 literary magazines and about 17 mass-market weekly magazines that print excerpts or serials from fiction and nonfiction books. Some cater to special genres: science fiction, mysteries, avant-garde, historical novels. Many are owned by huge conglomerates like Asahi, Yomiuri and Mainichi or by major book publishers; a few are shoe-string operations that are barely surviving.

One of the leading mainstream literary magazines is Shincho, sponsor of one of the two most prestigious Japanese literary prizes. Winners of the 1985 Shincho awards were announced in its July issue: among them was an American, Donald Keene, for his work Eternal Travelers: A Look at Japan Through Her Diaries, a compilation of diaries from that of Lady Murasaki in the 11th century to some from the 19th century. The monetary award is 1 million yen, over $4,000. Shinichiro Nakamura is the winner of the Shincho Award in the fiction category, for the last of his Four Seasons tetralogy, Winter. Shusaku Endo, one of the judges, describes Nakamura's work as a blend of Proust and The Tale of Genji with a religious theme, mainly Buddhist but akin to the Catholicism of Francois Mauriac. The Shincho Award for a new writer went to Kometani Fumiko for The Passover Feast, about her life in the United States with a Jewish husband and the cultural clash that ensued.

(There are over 80 different literary prizes which are awarded annually or biannually in Japan. The two most prestigious are the Shincho and the Noma. Others are the Akutagawa, Naoki, Junichiro Tanizaki and Yasunari Kawabata awards.) The Best Sellers

FREDERICK FORSYTH reportedly got a good part of $200,000 for the Japanese rights to his thriller, The Fourth Protocol. He and the Japanese publisher must have been smiling all the way to the bank because it was number-three on last year's cumulative bestseller list. This year's big sellers from the West are Lee Iacocca's autobiography (it was number two at the Book Center, Tokyo's largest bookstore, located in the heart of the financial district), Marguerite Duras' The Lover, Douglas Hofstadter's Godel Escher Bach and Peter Drucker's Innovation and Entrepreneurship: Practice and Principles.

Murder at Ueno Station, by Kyotaro Nishimura, is currently on top of the best-seller list. Following closely behind are two books by the enormously popular mystery writer, Jiro Akagawa -- Terrace by the Lake and Don't Kill Tomorrow. Akagawa reputedly was Japan's top-earning author last year. Another popular writer is Seicho Matsumoto, author of two detective novels, Vessel of Sand and Black Mist of Japan, as well as historical fiction. Not unsurprisingly, Samurai sagas tend to sell well in Japan; and this month, Sakaiya Taichi's two-volume biography of Toyotomi Hidenaga (younger brother of the famous warlord who helped unify Japan in the 16th century) is running closely behind Nishimura's murder mystery in the number-two best-seller slot.

Also on the list are Haruki Murakami's fantasy novel, The End of the World and Hard-Boiled Wonderland. Murakami says he is influenced by both Raymond Carver and Raymond Chandler.

There is of course a lot of fluff that sells well: pop stars' confessions, true romances, comic books for children and adults (they keep pouring out, many of them embarrassingly pornographic). If one were to analyze the Japanese psyche from the books and magazines often seen on trains and subways in Tokyo, one would conclude that they are driven by a passion for financial gain, sex, baseball, golf, and high-tech gadgetry. Forget zen and haiku. And cherry blossoms and geishas. This is Tokyo, plugged into the rest of the world, rushing full speed toward the 21st century.