Recent conversations with Chinese leaders have convinced me that the Congress of the Chinese Communist Party that has just opened in Beijing is likely to mark the rare example of a ruling group that voluntarily diminishes its dominant position. Of course the scope of government in a country of 1 billion population is comparable to nothing else. The majority of China's provinces each has a population larger than those of the most populous European states. Most of China's dynasties have each lasted longer than the entire history of the United States. China thus has a perspective all its own. About no other society would it be possible to repeat the apocryphal story of a Chinese leader's reply to the question of what he thought of the French Revolution: ''It is too early to tell.''

The task of governing China is made all the more daunting by its people's extraordinary mix of individualism and fierce sense of cultural uniqueness. Rulers have often despaired of achieving coherence by any means other than monolithic rule only to be submerged in the end by the elemental common sense of that multitude that defends its fundamental values by patient endurance. At the height of his power, when complimented by Nixon on having changed the face of China, Mao replied: ''No, I have only changed Beijing and a few of its environs.'' I thought then he was being polite; I now know he was prophetic.

Indeed Mao's intuition of the ultimate futility of his doctrinal obsessions caused him to unleash the frenzy of the Cultural Revolution. But in the end the Chinese people outlasted the violent attempt to impose an unnatural conformity by destroying all ancient values. Ironically, the Cultural Revolution brought about the exact opposite of its intention: it guaranteed reform. Every contemporary Chinese leader has survived a decade of degradation, imprisonment and deprivation. Far from being broken by the ordeal, they emerged serenely determined to reform the system that made such suffering possible.

This legacy is the principal reason to be optimistic about the poignant task Deng Xiao-ping has set for himself: to abandon, at the end of his life as a revolutionary, his movement's quest to bend reality to theory. Deng is fond of saying that he is neither a reformer nor a conservative, but someone ''who has sought truth from facts.''

That truth as it will emerge at the party congress is likely to contradict almost every previous Communist practice elsewhere: it will reject detailed central planning; it will implement two principles that are revolutionary in Communist terms: that a Communist state can prosper only if the Communist Party abandons the detailed supervision of government and if the government loosens its grip over the economy.

Experience everywhere, including the Soviet Union, has demonstrated that direct central planning cannot work, but only China has been prepared to face the full implications. In the absence of markets -- that is, a forum that balances preferences -- the planner in the end will impose his more or less arbitrary judgments. As a result, the goods that are wanted are not produced, and the goods that are produced are not wanted.

Moreover, central planning provides next to no incentive for quality or for innovation. Since all a manager produces will be bought by the relevant ministry -- indeed that is why it is in the plan in the first place -- quality is not a consideration. And innovation throws the whole complex planning edifice out of kilter. Above all, the centrally planned state, far from producing a classless society, ends up by enshrining class stratification. Where goods are allocated rather than bought, the real rewards are the perquisites of office: special stores, hospitals, educational opportunities for cadres.

How to overcome the dilemma that it is impossible to run a modern economy by central planning but that no Communist state has ever been run without central planning? Deng and his associates propose a practical Chinese solution: they will redefine the role of the Communist Party and the nature of planning. The Communist Party will be confined, at any rate in theory, to general directives. To this end apparently all the intermediate Communist control bodies in the factories and the government offices are to be abolished or at least sharply reduced. The government will be confined to what the West would call fiscal policy: legislation, taxation and indirect controls. Markets will play an increasing role. Even interest payments will be permitted, though under the euphemism of ''legitimate income from nonlabor efforts.''

If implemented, this will mark a watershed in Communist theory and practice. Millions of party cadres -- as many as half of the total -- will be transferred from their privileged positions into other jobs. China would remain a one-party state, but, except for general directives, economic life will follow its own momentum subject primarily to indirect controls. In time such decentralization must spill over into the political system; it will surely alter the relative weight of various elements of the power structure.

In reforms of such sweep, the intentions of the central government do not automatically translate themselves into action. Deng and his colleagues are certain to encounter on the part of the millions of cadres whose prerogatives are threatened the foot-dragging opposition which Chinese bureaucracy has perfected over the centuries. And these cadres will have the pretext that the transition from central planning to markets cannot be smooth.

For example, to weed out inefficient enterprises, prices should be permitted to rise. But Chinese leaders understandably fear the impact of inflation on a society used to price stability for 40 years, and they know that the collapse of the Kuomintang regime was accelerated by uncontrolled inflation. They therefore move with great care in experimenting with dual pricing mechanisms, with some prices controlled and others free -- a process that in other countries has always proved transitory and that in any country is certain to generate frictions.

Moreover until a new generation of industrial managers can be educated, the Chinese leaders may face resistance, even from some of the executives. In a market economy, the manager is an entrepreneur; he needs initiative to develop products and to find markets and credit. In a centrally planned economy, the manager is a politician manipulating the status quo. His skill consists of negotiating safe production quotas with the relevant ministries. Neither ministry nor manager has an interest in setting ambitious goals because failure to reach the goal will subject both of them to penalties. The centrally planned economy, of which the economy of the Soviet Union is the leading example, tends toward collusion between governmental and industrial quasifeudal fiefdoms. The centrally planned totalitarian state faces as its central challenge the irony that it can rarely find out what is in fact going on until reality overwhelms theory by a crisis. It therefore oscillates between stagnation and purges. The attempt to achieve total predictability winds up in chaos.

The quickest way to train a new generation of managers is to encourage foreign investment, which generates resources and trains personnel. But historically China has lived in a world of its own. The suspicion of foreigners and the passion to maintain China's identity have been magnified by the century of foreign exploitation that followed the opium wars. Moreover, China has no tradition of settling disputes by recourse to courts -- a basic principle of Western commercial relationships. In China, the guarantee of contracts has resided in the personal relationship of the parties. Hence, there has been resistance to the arbitration clauses that are the staple of Western commercial contracts.

Communism has added its own obstacles. The unwary foreigner often finds himself either engulfed in a bog of regulations or in endless negotiations between competing ministries or both. And the pool of talent in a country whose universities were closed for a decade during the Cultural Revolution has been thin. Thus one reason for the slow pace of negotiations in China has been that trained people were in short supply. These obstacles cannot be removed rapidly, but it is my impression that great efforts are being made to overcome them.

The two Communist giants have thus come -- nearly simultaneously and quite separately -- to the conclusion that the traditional Communist system is unworkable. They agree, too, on the key reforms necessary. But the odds of success of Chinese reform seem to me higher. For Deng and his colleagues, reform is a passionate commitment tested in the travails of the Cultural Revolution; for Mikhail Gorbachev and his colleagues in the Soviet Union, the impetus for reform is more technocratic and analytical. He seems much less prepared psychologically to undertake a truly structural reform. China is culturally homogeneous; the Soviet Union is an empire. Decentralization in China has historical roots; for the Soviet Union decentralization merges with the nationality question and threatens the national cohesion.

China has an entrepreneurial tradition; the Soviet Union has not. However much they may differ in specific remedies, Chinese who have experienced the Cultural Revolution are united in the determination never to permit a recurrence. The Soviet Union has not known comparable upheavals for 50 years, and there are very few survivors of the purges. Its population has experienced a slow improvement in living standards -- far from adequate but enough to generate distrust of major dislocations. The Soviet bureaucracy is much more deeply entrenched than their Chinese opposite numbers and is certain to fight anything approaching China's reforms ferociously. It is no accident that the Soviet reforms so far have stopped far short of invoking anything approaching market mechanisms. And the Soviets must carry out their reforms while maintaining superpower status at a time when China is deliberately skimping on its military forces to create the basis for greater strength later.

While China is preoccupied with its domestic adventure, foreign policy is in a lower key. But unsentimental practicality dominates that sphere as well. Chinese leaders do not share the obsession of so many in the West who see in glasnost the deus ex machina to eliminate risk and the need for effort. The obsessive invocation of the Soviet danger of a decade ago has been muted, but it is not clear whether it is because the Chinese leaders are reassured or because they have learned that it will undermine their bargaining position -- I suspect largely the latter.

Chinese leaders are made restless by endless Western speculation about changes in Soviet demeanor; they consider it a sign of sentimentality that may well lead to a general lowering of the guard. In the Chinese analysis, arms control is not an end in itself. Beijing measures progress by changes in political conduct for which they have laid down three criteria: Soviet withdrawal from Afghanistan, Soviet withdrawal from the Chinese border and withdrawal of Vietnamese forces from Cambodia. The last condition is the most difficult for the Soviet Union to fulfill and also the one about which China is most insistent.

Chinese leaders, in short, analyze foreign policy in terms of the balance of power, not of changes of personality. China will always be wary about the colossus at its northern border. It may well improve relations with the Soviets on a technical or economic level; I would be amazed if Chinese leaders do not stop well short of the point that would jeopardize its Western ties, for whether they admit it or not, they look at these relationships in part as a reinsurance against possible aggression from the Soviet Union, however unlikely.

America has recognized its stake in China's future. Nearly the only foreign policy uncontested throughout the bitter domestic debates of the past decade and a half in the United States has been friendship with China. It must not now be neglected in the preoccupation with East-West issues. And the prospects for significant achievements that will last have never been better.