China proposed today that talks with Vietnam begin next week in Hanoi to end their 31-day war, but Vietnam demanded a complete Chinese withdrawal first.

A diplomatic note from Peking proposed that vice-ministerial negotiations begin "about March 28," five days later than the date suggested by Hanoi on Saturday.

"To show the sincere desire of the Chinese side," China said the negotiations should open in Hanoi, then move to peking. Vietnam had proposed the talks be held exclusively in Hanoi or along the border:

In its proposal for negotiations Saturday, Vietnam said talks depended on the withdrawal of Chinese troops "still occupying many positions in Vietnamese territory."

Radio Hanoi again denied Chinese withdrawal claims today, saying border areas in several provinces were still held by the Chinese Army, which invaded Feb. 17.

Western military sources, too, said an undetermined number of Chinese troops appeared to be holding on to strips of land up to 1.2 miles inside Vietnam.

The Chinese note, released by the New China News Agency insisted that the two sides discuss ways to ensure "peace and tranquility" along the border before tackling boundary and territorial disputes.

Meanwhile, guerrillas loyal to ousted Cambodian premier Pol Pot said they had captured a major town only 25 miles from the Cambodian capital of Phnom Penh.

Diplomatic sources here were unable to confirm the claim by Khmer Rouge radio that Kompong Speu, west of Phnom Penh, fell to the guerrillas two days ago.

The radio, believed to be operating from southern China, said more than 100 Vietnamese soldiers were killed during the capture of the city. It said there had been many small guerrilla attacks all over the country last week, killing nearly 130 Vietnamese.