China's sudden agreement to full diplomatic relations with the United States climaxes a month of extraordinary debate in Peking and two years of unprecedented shifts in Chinese foreign and domestic policy.

In a single stroke, the Chinese have cast aside their former frefusal to allow continued American arms sales and other guarantees of Taiwan's security in any normalization arrangement and announced the first visit ever of a top Chinese Communist leader to Washington.

The Decision opens the way for wide ranging diplomatic, social and economic contacts between the world's richest nation and the world's most populous nation.

The announcement of full reations with the United States and Vice Chairman Teng Hsiao-ping's scheduled January visit to Washington revealed a daring Peking dicision to solidify ties with the West and build the Chinese economy without any further consideration of contraints of socialist idealogy and national pride. It follows the recent signing of a landmark friendship treaty with Japan and an explosion of international trade and diplomatic contacts.

The decision, apparently taken at a series of top level meetings in Peking in the last few weeks, suggests the Chinese are deeply concerned by reported Soviet efforts to beef up forces on the China border. Moscow's new ties with Vietnam and the growing Vietnamese assault on China's ally, Cambodia. By allowing U.S. arms shipments to Taiwan. Peking has essentially endorsed American intervention in what it considers a civil war, a violation of Chinese principle that many diplomats here thought no Peking government could ever agree to.

At an extraordinary press conference held in Peking to announce the normalization decision, Chinese Communists Party chairman Hua Kuo-feng repeated the usual Chinese contention that "we can absolutely not agree" to limited arms sales to Taiwan. But he indicated China's decision to tacitly allow the sales by saying that although "our two sides had differences and on this point . . . nevertheless, we reach Agreement on the joint communique."

The sudden turn of events is a triumph for Teng, who has pushed his pragmatic line in foreign and domestic affairs since returning to power in July 1977 after an unprecedented second political purge.

The decision also marks a major landmark in the new era of reforms that began in China with the death of Communist Pary Chairman Amo Tse-tung on Sept. 9, 1976. Mao made the first move to improve relations with the United States when he invited President Richard Nixon to Peking seven years ago. But mao never appeared to endorse an agreement as favorable to continued U.S. ties with Taiwan as this one.

The Chinese apparently feel a need for American backing to frighten off the Soviet Union from any serious border intervention while the Chinese People's Liberation Army builds up its ill-equiped and under-trained force. U.S. approval of sales of European arms to China would also help speed up the strengthening of Peking's defenses.

Even more important, Pekin needs American technology and financial resources to meet its goal of full industrialization by the 21st century. Trade contacts have increased without normalized relations between the two governments. But full diplomatic ties and what is expected to be a quick solution to a 30-year-old problem of frozen assets will allow American banks to provide speedy loans and allow the Chinese to take advantage of lower tariffs and other benefits.

Every major Chinese change in domestic or foreign policy in the last 30 years has brought some kind of significantadverse domestic reaction, however. The Peking government continues to complain of resistance to its new pragmatic policies from officials who remain loyal to the ideals of national self-reliance and internal class struggle formulated by Mao.

If the post-Mao government experiences any significant failure in its effort to increase living standards and food supplies and lower the population growth rate, holdovers from the Mao era now voicing nominal support for the government could rise again to challenge the turn toward pragmatism.

Vice-Chairman Teng is 74. His age, and the advanced age of many of his most capable allies among veteran pragmatists in the government, leaves some doubt as to what the future holds for Chinese policy. Party Chairman Hua. Teng's nominal superior, has appeared to defer to Teng in most important domestic and foreign decisions in the last year, but Hua has indicated some opposition to the new scientific and technical elite that Teng wants to create in order to speed modernization.

Many of Hua's potential allies among holdovers from the Mao era have been purged from important provincial and central offices in the last two years. But it remains possible that they could return, just as Geng did after being purged twice by Mao.

Teng has told interviewers he wished to visit the United States at least once before he went to "see Marx." He visited the United Nations in 1974 but that visit was not been considered to be a visit to America. He remains the leading Chinese negotiator on relations with the United States Cyrus Vance during his visit to Peking in August 1977.

The sudden announcement of the normalization indicates the series of meetings at the central committee level reportedly going on in Peking in recent weeks have been touching on major foreign policy issues as well as the domestic problems facing the post-Mao leadership.

The timing of a decision as daring as this one suggests than an outporing of wall posters in several Chinese cities calling for foreign and domestic policy reforms may have been in part encouraged by central leaders seeking to persuade recalcitrant colleagues.

The announcement also comes at a time of great tension on China's border with Vietnam. Pekin has warned Hanoi in the past week of serious consequences if it continued to launch short raids into China. Vietnam has replied with charges of Chinese incursions into its territory, and there have been reports of military preparations on both sides of the border.

Peking's additional concern over the Soviet Union may have been aggravated by reports from Eastern Europe of Soviet attempts to include more Eastern European troops and funds in its European command. Some Chinese commentators have suggested this was a device to free Soviet troops and defense funds to bolster defense forces along the Sino-Soviet border.