Chinese leaders have begun to put some limits on the pro-Western democracy movement in Peking and Shanghai as reports circulate of important highlevel meetings in the Chinese capital.

Recent travelers report dozens of posters have been washed off walls of one busy waterfront avenue in Shanghai and some also removed from a shopping street in Peking, although some Peking residents say they have noticed no poster removal.

A March 6 Shanghai police directive quoted by diplomatic sources said posters could only go up in designated areas, which one poster immediately attacked as "suppression of democracy."

The official Chinese press recently has defended the constitutional right of citizens to put up wallposters, but it warned against protests that go too far. There have been several small demonstrations in Chinese cities recently by workers and peasants protesting past official discrimination, and some protests have resulted in violence.

Diplomatic sources in Peking also said they had unconfirmed reports of a speech by Vice Premier Deng Xiaoping (Teng Hsiao-ping) last week in which he expressed concern over growing contacts between Chinese and foreigners and over wallposters that attack official government policies. One source said Deng reportedly criticized posters that asked President Carter's help in improving China's human rights situation.

In another sign of reaction against the pro-Western interests of several young intellectuals in the wallposter movement, the official China Youth News rebuked youths who adopt "the corrupt and decayed side of the capitalist society."

Diplomatic sources in Peking said some Chinese dancing with foreigners at an international club dance Saturday were asked to leave by Chinese officials. The official Peking Daily referred Sunday to people committing crimes "under the cover of entertainments" and said "some rejects from society have been selling state secrets."

Some Western correspondents in Peking have recently reported Chinese casualty figures and other information about the invasion of Vietnam allegedly obtained from official Chinese sources. One correspondent said what he took to be Chinese security men in cars followed him when he took a Chinese dinner guest home recently.

Other diplomats and some Chinesespeaking foreigners who recently visited China reported, however, that Chinese were still eager to engage in long, if general, discussions of China's economic and political problems.

A dispatch by the official New China Agency said the youth publication printed a cartoon showing a veteran worker holding up a copy of "The World's Advanced Technology" to "a long-haired young man and young woman wearing bell-bottom trousers and carrying magazines called 'Foreign Fashions' and 'Foreign Hair Styles.'"

"Young people, this is what you should learn," the cartoon caption read.

A Workers' Daily article yesterday criticized people who "doubt the superiority of the socialist system" and "boost bourgeois democracy and democratization to the extreme."

The newspaper said "it would be absolutely wrong to come to the conclusion that human rights are not respected in a socialist society and that a campaign must be launched to 'defend human rights.'"

In the past several months, the Chinese government that took over after the death of Chairman Mao Tse-tung in late 1976 has allowed a limited revival of Western dancing and music and imported some Western movies, including the recently released "Convoy." The relaxation was a reaction to Mao-era restraints on Western influences, including needed Western technology. Some leaders apparently now worry that the pendulum may have swung back too far.

Diplomatic sources here and in Peking said they had unconfirmed reports that some top leaders with close prior links to Mao, including number six party leader and internal security expert Wang Dongxing (Wang Tunghsing), had undergone severe criticism at recent meetings. Wang has not been reported in public since Feb. 15, but diplomats said they had no confirmation of rumors he had been arrested. One Chinese official reportedly said Wang appeared at a March 17 party meeting.

Diplomatic sources and foreign visitors to Peking who have met with prominent Chinese say important discussions are going on concerning the future of the rapid economic and social reforms of the last several months. Some leaders also are reportedly discussing how far to go in dismantling the personality cult that once surrounded Mao.

One Chinese with close ties to the leadership told a Western visitor that the Communist Party hierarchy was very seriously considering a direct attack on Mao and Mao's efforts in the last years of his life to purge Deng and other veteran party leaders. Up to now, the official press has mostly blamed the purges on Mao's wife, Jiang Qing (Chiang Ching) and on Mao's one-time heir apparent, defense minister Lin Biao (Lin Piao).

A direct attack on Mao would open up other sensitive political issues that might distract the Peking leadership from its effort to revive the economy. The present party chairman, Hua Guofeng (Hua Kuo-Feng), 57, was personally selected by Mao, for instance. Some veterans in the current leadership are thought to be critical of Hua's relative youth and limited experience in Peking after a career spent mostly in Mao's home province, Hunan.

Some analysts argue that recent official criticism of mistakes in the text of the fifth volume of Mao's selected works, including a failure to refer to Mao's adversary and China's former president, Liu Shao-chi, as "comrade," were indirect attacks on Hua, who was responsible for editing the volume.

Some diplomats say they expect China's parliament, the National People's Congress, to convene this year to adopt a new economic plan and perhaps again reshuffle the leadership.