Peking has protested U.S. legislation dealing with Taiwan as doing "great harm" to future relations. It is the first such Chinese warning to Washington made public since the two countries opened full diplomatic ties Jan. 1

An official New China News Agency dispatch released today said Chinese Foreign Minister Huang Hua told U.S. Ambassador Leonard Woodcock March 16 that bills passed by both houses of Congress were "unacceptable to the Chinese government."

[The State Department confirmed Saturday that Woodcock had been called in by Huang but said it had no comment on the matter.]

A separate official Chinese news agency story described the portions of the nearly identical House and Senate bills committing the United States to Taiwan's security as particularly objectionable to Peking. The story also criticized clauses recognizing the existence of a separate government on Taiwan and barring Peking from taking over property of Taiwan's former embassy in Washington.

Diplomats had expected China to make some protest about congressional strengthening of security guarantees for Taiwan. Peking considers the island to be part of its territory, temporarily controlled by an illegitimate Nationalist Chinese leadership. It is uncertain, however, whether Peking will go so far as to halt or delay developing diplomatic, cultural and trade ties with the United States to underline its displeasure.

The Chinese agency said Huang Hua told Woodcock, "If the bills are passed as they are worded now, and are signed into law, great harm will be done to the new relationship that has just been established between China and the United States."

Huang asked the U.S. government to ensure that the Taiwan legislation does not violate Washington's agreement on normalized relations with Peking, but the Chinese agency gave no hint what action China would take if President Carter signed what it considered unacceptable legislation.

The Chinese protest came shortly after an attack on capitalism and the U.S. human rights campaign in a Peking newspaper that was in sharp contrast to glowing descriptions of American life found in the official Chinese media in recent months. Recently, American businessmen have found negotiations about projects in China slowing down.

The changes seem related, however, to an internal reassessment of China's sudden political liberalization and foreign trade growth over the last several months, rather than to any reaction to American efforts to retain some commitment to Taiwan's 17 million people.

Chinese Vice Premier Deng Xiao-ping (Teng Hsiao-ping) reportedly complained at a closed-door party meeting March 16, the same day that Huang met Woodcock, of earlier Peking wallposters that had asked President Carter's help in improving China's human rights record.

An article in the Peking Daily on Thursday appeared to follow this theme, criticizing "certain young comrades" who "will beg the support of imperialism" in their campaign for human rights. This showed "lack of patriotism," the articles said.

The newspaper argued that "priviledges" still remained in the United States despite its efforts to "show off its human rights." It described capitalism as a "mercenary slave system of unemployment, police persecution, suicides, prostitution and so on."

Huang told Woodcock the bills passed by the U.S. Congress "contravene the principles agreed upon by the two sides" when Washington and Peking announced Dec. 15 their formula for ending 30 years of diplomatic estrangement. Huang appeared to be referring particularly to the U.S. promise to end its mutual security treaty with Taiwan and end all official ties with the island.

The congressional bills are designed to continue American Trade, cultural and other ties with Taiwan through creation of an unofficial American Institute in Taiwan as a subsitute for the U.S. embassy. Following a system used by the Japanese when they broke relations with Taiwan in 1972, the institute is to be staffed by U.S. foreign service officers and other U.S. personnel who will temporarily resign from government service while they work in Taiwan but generally perform the same duties they did as embassy staff.

Carter administraton spokesmen assured Congress that Peking was not interested in and not militarily capable of taking Taiwan by force, and that no guarantees of the island's security were necessary, but Congress still insisted on adding language that Peking considers to be interference in its relations with one of its provinces.

The Chinese news agency singled out language in the Senate bill declaring continued U.S. capacity "to resist any resort to force or other forms of coercion that would jeopardize the security, or social or economic system of the people on Taiwan."

The Chinese agency protested parts of the bill that said Taiwan authorities would be considered a "foreign government" under any other applicable U.S. laws.

It complained of another clause that said ownership of the spacious and valuable Embassy grounds in Washington would not be affected by normalization of relations with Peking.

Taiwan turned the properties over to a group called "The Friends of Free China" in December, but the State Department said it would support Peking if it chose to bring suit seeking ownership as the recorganized government of China.

The Chinese news agency said the embassy properties "should be legimate properties of the People's Republic of China."