Taiwan apparently has begun to increase underground trade and foreign contacts with mainland China that in the distant future could lead to negotiations.

Officials here report that, despite Taiwan's public refusal to deal with the Communists, its purchases of mainland goods through Hong Kong increased about 75 percent to $25 million in the first half of this year.

Twiwan sold to China through here about $36,000 in goods, mostly plant seeds. This semisecret commerce, largely made up of mainland Chinese herbs highly prized in Taiwan, does not include a substantial volume of goods being smuggled between the mainland and its estranged offshore island province.

Although President Chiang Ching-kuo of Taiwan denounced any talk of reunification with the Communist mainland after the announcement of U.S. recognition with Peking, he and other Taiwan leaders have privately discussed what they see as the favorable, if perhaps temporary, interest in more democracy and free enterprise on the mainland.

Some officially backed publications on Taiwan hav even called for Taiwan's overseas students to seek out contacts with mainland Chinese being sent in great numbers to sudy abroad, if only to try to win them over to the anticommunist point of view.

"We should no treat the Communist Chinese students as snakes and scorpions and cut off contacts with them," said the Great China Evening News in Taiwan. "On the contrary, we should use initiative to persuade them, convince them and win them over."

"If we act properly, the new measures taken by the Chinese Communists will turn out to be to our advantage," Chiang was quoted as saying by Taiwan's United Daily News.

The two sides continue to respect airspace divisions and holiday schedules in their gentlemen's war in the Taiwan Strait.The Chinese bombard Taiwanese-held islands just a few hundred yards off the Chinese coast, but the shells contain only propaganda leaflets and usually fall only on well-advertised days. The Taiwanese trturn the favor. This allows dignitaries to visit the once regularly besieged islands of Quemoy and Matsu without risking uinjury.

When a defecting Chinese Air Force pilot, Fan Yuan-yen, escaped across the strait in his Mig19 in July 1977, the pursuing Chinese jets turned back long before reaching the halfway point in the strait. They apparently did not want to enter agree-upon Taiwanese airspace.

In the last three years, Peking on several occasions has released former Nationalist Chinese army officers and intelligence agents and allowed them to return to Taiwan. Some were sent to Hong Kong. Others were put in boats and allowed to row over to Uqemoy and Matsu. The Far Eastern Economic Review quoted Taipei government sources as saying the mid-point rendezvous to pick up these men required "prior and explicit mutual arrangement."

Apparently Chiang is sincere in denying his government has any plans to negotiate formally with Peking. Any sign that Taiwan might make a deal with the Communist mainland, where political stability is far from certain, probably would create a panic among foreign and Taiwanese investors in the island's economy.

But Taiwanese have shown interest in Peking's recent calls for great change in the mainland's economic and social system, such as adopting wage incentives and seeking foreign loans to increase living standards. Some Nationalist Chinese have gone so far as to refer to the phenomenon as the "Taiwanization of the mainland."

Through years of foreign investment, hard work and conservative economic management, Taiwan has produced one of the highest average standards of living in Asia. Nearly every home has a televison set. American consumers eagerly purchase Taiwan-made shoes, umbrellas and textiles. Some recent wallposters and even official articles in China have confessed grudging admiration for these developments, although the Chinses have criticized Taiwanese for allegedly giving up their economic independence to foreign investors and creating gaps between rich and poor.

Chiang demands considerable personal austerity on the part of his officials, however, and the wage gap on the island may be the smallest of any nonsocialist state in Asia. Peking may also find it difficult in the future to criticize Taiwan for seeking foreign loans when its own trade officials are setting up finance arrangements in Western banks all over the world.

Taiwanese specialists on mainland politics say that such radical changes in the mainland's economic system will not be able to survive the next round of political purges in Peking. They point to brief periods of Western-style political debate and economic rerorms, such as in the mid-1950s, that evaporated when Peking's leaders decided the power of the Ommunist Party and its socialist ideoloty were threatened.

Contacts between the two sides short of serious negotiations on reunification may be possible in the near future. One of the recent wall-posters in Peking suggested arrangements for exchange of mail and tourist visits between Taiwan and the mainland.

This would appeal to family-centered Chinese, who often find themselves living on oposited sides of the strait from cousins, sisters or even parents.

Chun-tu Hsueh, professor of politics at the University of Maryland, said in an interview here that his wife's brother held a seat in the mainland's People's Political Consultative Conference while his wife's sister served on Taiwan's legislative council. The two accepted the situation without rancor, he said. Soon Chin-ling, one of the highest-ranking women in the Peking government, is the sister of Soon Mei-ling, the widow of Taiwan's generalissimo Chiang Kai-shek. Many families divided like this often use relatives or friends living in Hong Kong to forward mail back and forth.

Peking, pleased with its progress in isolating Taiwan diplomatically, has begun to embrace the idea of increased contacts in a propaganda compaign aimed at overseas Chinese that has been successful enough to infuriate Taiwan. Peking invited nine Taiwanese athletes to join its team at the Asian Games, even to the extent of leaving blank spaces for their photographs in the team booklet. The Taiwan athletes, led by former world champion sprinter Chi Cheng, denounced the maneuver as a "political united front plot."

Chi Feng, deputy director of the Hong Kong branch of Peking's New China News Agency, used the same approach in a private speech to leftist businessmen here. He reportedly praised Taiwan's economic progress and suggested local merchants increase their reexport of mainland goods to Taiwan. The Taiwanese at present pretend that such goods originate in Hong Kong, since trade with the mainland is officially barred.

Taiwan's usually hostile reaction to friendly mainland gestures softened somewhat with its decision this year to allow its scientists to attend conferences in Manila and Tokyo where Peking scientists were present. Taipei's approval of contacts between its overseas students and students from the mainland also suggests a more relaxed approach. Peking plans to send more than 500 students and scholars next year to the United States, where an estimated 10,000 students from Taiwan already live. Whatever comes of such contacts may affect relations between the two parts of China for years to come.