Two flags flank the second story window of the Kuomintang of China Club, over-looking Washington's Chinatown. On the left is the red, white and blue flag of the United States and on the right is the red, white and blue rlag of Taiwan.

Yesterday, as about 40 elderly Chinese men sat inside the club, the talk was angry, bitter.

"Now is the end," said one baldish man who was hunched over a table, playing mahjongg."I will not say a bad word against my president but if the United States wants to be that way, then they be that way. They throw Taiwan to the dogs. For what?"

"I don't like Red China. They are not good people," said Hock Lee, another member of the club, which includes veterans of Chiang Kai-shek's losing battle for control of mainland China.

Throughout Chinatown there was a stunned reaction to President Carter's announcement Friday night that the United States will cut its formal ties with Taiwan to establish full relations with the communist government in Peking.

But beyond the surprise at the sudden decision were the uncertainty and insecurity of facing the changing reality of the China they once knew and the China they had hoped to see again. There was talk of relatives and friends in Taiwan and concern that the nationalist government is now defenseless against China's military power.

The old, who left their homeland in 1949 when the Communists took over or before, were fiery in their anger.

The young, the second generation Chinese-Americans or recent immigrants from Taiwan, reacted with a nod and generally said it was a tough but necessary decision.

"The older people," said a young man who was working as the maitre d' at the Golden Palace restaurant, "when they came (to Washington) years ago they always believed they would be able to go back to the China they left years ago. They want China to be the way they left it. And some of them came here before the Communists and they had planned to go there to retire. So for them this is the end of that dream . . . they must wake up.

"They know things will never be the way they were before," he said.

"In this community," said Duane Wang, the owner of Wang's grocery and gift shop at Seventh and H streets NW, "the old people still carry the faith of Taiwan. All the groups in the community have ties with Taiwan. The largest group, the Chinese Benevolent Association, has a representative from the Taiwan embassy at all its meetings."

However, one elderly Chinatown resident, butcher Lee Won Sing, called the Nationalist government "stupid."

"Some people are crazy about the Nationalist government," he said, "but they have done nothing in the 50 years they have been there, not even build a road. Look at Red China-they built the atom bomb and they have been there only 30 years. Everybody has a job. Look at Russia-they are trying to take over the world but they don't scare the Chinese Communists."

The reaction of leaders of Washington area Chinese groups to Carter's actions was mixed.

Art Ping-Lee of the Lee Family Association called it "something I can't understand. This is a shame. The pain I feel . . . it is an injustice for something like this to be done"

Van S. Lung, owner of the Yenching Palace restaurant on upper Connecticut Avenue and the executive director of the National Association of Chinese Americans, said he was "overjoyed," at Carter's announcement.

"I am confident that this will lead to China and Taiwan resolving their differences," Lung said.

He said he believes the decision will help Chinese in Washington to become more united because political affiliations to either China or Tawian will become meaningless.

"I believe that the people who are unhappy with what happened are a very small, uniformed minority that do not reflect the feelings of most Chinese Americans," he said.

Nelson Lao of Potomac, who came to the United States from Shanghai in 1959 and is now a chemist at the U.S. Food and Drug Administration said most Chinese Americans feel that "political expediency" has won out over loyalty.

In the middle of the strong feelings in support of against the president's decision Faye Ng, the proprietor of the Chinatown Market, said he viewed the U.S. decision as a badly timed intervention into a private dispute.

"It's like a husband and wife fighting," he said. "Why should somebody else get involved? That's not right. If they were going to do this the United States should have waited until the older generation dies out in both countries and new blood makes for a new relationship-maybe a love affair."