Celebrated architect I.M. Pei has unveiled his design for the new Bank of China building here, a 70-story glass and steel structure intended to symbolize Peking's modernization drive and commitment to the future of Hong Kong.

The Pei building will stand in Hong Kong's busy Central District, only two blocks from another new banking showcase, owned by the dominant colonial Hongkong and Shanghai Banking Corp. The new Hongkong Bank building, designed by British architect Norman Foster, is now under construction. Foster's building has been promoted as the most modern building in the world; Pei's tower poses a direct challenge to that claim.

The architectural rivalry between Hong Kong's leading colonial bank and the Chinese Communist flag-carrier has long been a feature of historical gossip. The headquarters until recently occupied by the Hongkong Bank was built in 1935; at that time it was the tallest building between San Francisco and Cairo, as well as the first in Asia to boast air conditioning.

In 1949, when Communist leaders took control of China, the government inherited a bank building in Hong Kong formerly used by the Nationalist government. Not to be outdone in the British colony in the matter of height, the Communist Bank of China constructed a flagpole at the top of its building that reached higher than the neighboring Hongkong and Shanghai Bank.

With its two bronze Shanghai lions, "Stephen and Stitt," guarding the doors, the Hongkong and Shanghai Corp. building was a local landmark until it was demolished in 1981 to make way for the Foster model, a high-tech design brandishing painted aluminum cladding and steel masts.

The old Bank of China building, where, it is whispered, a full clinic on the 12th floor treated Communist demonstrators during the Cultural Revolution riots of 1967, will remain next door.

Chen Hung, deputy general manager of the Bank of China in Hong Kong, said recently that the Pei building will be the most distinguished high structure owned by China, serving as a demonstration of China's long-term confidence in the prosperity of Hong Kong, which in 1997 will transfer power from British to Chinese hands.

Pei, who also designed the East Building of Washington's National Gallery of Art, said he accepted the assignment partly for sentimental reasons. His late father, Pei Tsu-yie, was the first Hong Kong manager of the Bank of China during the time of the Nationalists, and he set up the first foreign exchange department in Chinese banking history.

Pei's design is devoid of sentimentality, but it does not lack spirit. Pei says the soaring tower's unique design of triangular glass and metal shafts rising out of a two-story granite base is the result of a new concept in "megastructure bracing," which permits a high level of economy in space and safety when facing typhoon winds.

He said that the granite base conveys the sobriety of the bank, while the tower conveys a sense of lightness. The new concept of triangular bracing uses about 40 percent less steel than a conventional building, he adds. In contrast to the many glass boxes that have shot up in Hong Kong over the last decade, Pei uses unexpected angles and profiles in a multifaceted design that will change the Hong Kong skyline.

When asked for Peking's initial reaction to the Pei blueprints, the architect's son, L.C. Pei, laughed and said, "They were pretty positive. I don't think they expected a pagoda." In fact, the senior Pei said, the only restriction placed on him by the Chinese was a budget of $1 billion (U.S. dollars). They also discouraged the architect from inserting any typically "Chinese" elements into the design. "Their suggestions have made it a better building," he said.

Cost overruns and design modifications have plagued the Foster building. "As corporations in Asia take on the new role of patrons of architecture, the lesson to be drawn from the Hongkong Bank building is that such a project needs as much planning as would a major takeover bid," said a local editorial in early 1983.

The bank's decision on Foster, who has a reputation in Europe for advancing architectural design, was applauded as an important breakthrough for Hong Kong, where speed and cost traditionally take priority over artistic merit. The building eliminates the need for heavy, obtrusive columns in the floor design, a major plus in a city where space is at a premium. Foster has proposed a building suspended from masts, like a bridge, with colorful delineations of the supporting structure, and services for the building -- air conditioning equipment, toilets, water systems -- contained in modules that attach on either side of the building. Telecommunications and power services to each floor are located under specially designed raised floor platforms.

However, the innovative design came to be nicknamed "Foster's folly" by some here when it became clear that the cost would exceed the original budget $1.3 billion announced in 1981 -- reaching at least $5 billion instead. The bank has pared away some of the more ambitious design items, and belatedly controlled spending under the advice of an outside consultant originally brought in to solve a dispute over a steel cost overrun.

Now sticking more rigidly than ever to schedule, Hongkong Bank officials promise that their controversial building will be ready for occupancy by November 1985. The Bank of China is hoping for better luck with its tenders, but it doesn't expect to complete its building before the winter of 1987 at the earliest.

Hong Kong faces an uncertain future once China takes control of both administration and sovereignty in 13 years, but at least the former colony can boast of two buildings that relieve the architectural mediocrity prevailing today. Whether Hong Kongremains an international center important enough to attract architects such as I.M. Pei and Foster will be seen in the coming years of transition.