A House subcommittee was urged yesterday to approve legislation forbidding further U.S. investments in South Africa in protest against that country's policies on race.

But a British economist warned that such a ban would have only symbolic effect and do no economic damage to the African nation.

"If you're talking of shutting off the flow of foreign capital, South Africa can handle it," John Suckling, a professor from the University of York, told the House International Relations subcommittee on trade.

He said South Africa has had success in closing a gap between export earnings and import costs because of sales of gold, and would not be crippled by a loss of some investments.

He also said it would be impossible to remove existing foreign investment because of exchange control regulations that limit the amount of capital that leaves the country.

Human rights activists have charged that U.S. investment in South Africa have helped finance a system where a white minority can afford to repress the other 83 percent of the population.

In April, a House Banking subcommittee voted to prohibit the Export-Import Bank from supporting private business transactions with South Africa. The sale of firearms to South Africa has been prohibited since 1963, under the U.S. Neutrality Act.

A bill by Rep Stephen Solarz (D-N.Y.) would prohibit new investments in South Africa although companies already having holdings there would be allowed to keep them. His bill also would permit U.S. companies in South Africa to continue to re-invest their profits there.

Solarz called his bill a "moderate proposal" that would reaffirm the United States' "rhetorical support" for the elimination of apartheid in South Africa.

"Passage of this bill would be a significant step toward making it clear to the South African government that we're prepared to increase economic and political pressure," Solarz said.

At the end of 1976 there were 350 U.S. companies with $1.7 billion invested in South Africa - 16 percent of that country's foreign investments. U.S. banks hold another $2.2 billion in loans.

Solarz said it would be "politically imprractical" for the United States to withdraw all its investments from South Africa. He said a "moral justification" exists for investment, creating opportunities for blacks that they were otherwise would not have.

A political scientist disagreed "The massive influx of foreign capital during the last 30 years does not appear to have weakened or endangered the system of racial domination," UCLA professor Richard Sklar, who nevertheless supports Solarz's bill.

"It is plainly disingenuous to assert that American or other foreign investors seek to secure the rights of black South Africans as workers or citizens," he said.