It is one of the world's largest and most powerful newspapers, yet, in a year of hectic production schedules for the rest of China, the People's Daily continues to plod along as if it was nothing more than a slightly overgrown Rocky Mountain weekly.

The Chinese have been boasting of startling changes this year in the nation's number one newspaper, whose six-page, relentlessly gray format has varied less in the last three decades than perhaps any other major Chinese institution. Now a longtime reader notices shorter, livelier articles; more letters to the editor; more color photographs, and fewer, or at least a little fewer, turgid maxims from the late Communist Party Chairman Mao YTse-tung.

For its impact on its millions of readers, however, the paper's editors act as if they never heard the word deadline. Sometimes the People's Daily is a morning paper, a Chinese official said five years ago. Today, as far as foreign visitors can tell, that morning readership has lost all hope.

At the same time, the newspaper's reach and influence seem to have increased. A visiting group of American publishers, all directors of the Associated Press, were told during a visit to China this month that the People's Daily now has a circulation of 5.5 million. That is 2 million more than the circulation figure given to a group of British journalists five years ago.

The American publishers, none of whom could boast such massive circulation, found during a rare visit to the People's Daily office that they were stepping back into another era.

The pressroom at the paper's office on busy Wangfuching Street "was tiny," said katharine Graham, publisher of The Washington Post. "There were only two presses and the difference from modern American facilities was like night and day. In the adjacent composing room, some type was handset," she said.

The first press printed the first four pages, the second printed the other two pages. Then they were taken to the post office where at least 1.5 million copies were put together and folded by hand for distribution to readers.

The papers has no real competition. It is the official organ of the Chinese Communist party and its the first publication to print important editorials, Politburo name lists and reports of visiting dignitaries.

China's 35 million Communist party member risk difficulties if they do not read if daily. Its influence extends to hundreds of millions of other Chinese who hear the newspaper's pronouncements repeated in regular political study sessions.

A member of the American publishers group asked why it published only six pages. The answer, said Graham, was "everybody finds it difficult to finish more than six pages."

That was even more difficult, the Chinese say, during the days before Mao's death when his most dogmatic discples - now called trators to his thought - controlled the People's Daily and other important Chinese publications. They insisted on running long dissertations on fine poits of Maoist dogma. After Mao's death in September last year they were pruged, and the new Chinese media supervisors have called for shorter articles and even some jokes to leaven the newspaper reader's daily menu.

One sample gives a good illustration of the level of humor in the Chinese Communist Party:

Two Czechs were talking about their nation's treaty with Moscow after the 1968 Soviet invasion, which called for "temporary" stationing of Russian soldiers on Czechoslovan soil. "What does temporary mean?" asked one. "It means one day less than permanent, according to the Russina dictionary," said the other.

Production of the People's Daily illustrates a unique Chinese mix of modern and primitive. Page mats are sent to printers in 17 other cities throughout China, including six who receive them via radio facsimile. But the regular setting of type is held up by the peculiarities of the ideographic Chinese script, wich makes modern keyboard typesetting nearly impossible. A compositer must reach into pigeon holes set up along a wall to take out characters, one by one. There are about 6,000 characters in use, of which 2,000 are used frequently.

It look one young woman compositer, the American publishers were told a half hour to set 800 words.

Like American editors, the Chinese are now searching for simpler, consumer-oriented material to interest their readers. One article this week spoke approvingly of a 1964 story entitled "Notes on Peking's Cabbage Supply" that pleased Mao.

But as for lively writing, the Chinese seem to be unable to have much fun in print unless they are attacking the Soviets. Then it is no holds barred.

In the People's Daily's new "Short Takes" column recently, an anonymous writer recounted gleefully, and disapprovingly, a reported Russian return to Christianity.

"The spirit of Russia is the spirit of religion," the Chinese writer quoted a renegade Russian saying. Then, in a burst of playfulness usually unheard of in the dour Chinese press, he added his own "Amen!"