At prestigious Yunnan University, the English language students and their professor puzzled over the slightly misprinted news story, beginning "U.S. State Department spokesman hodding Carter..."

A long discussion ensued.

"Why are they hodding poor President Carter?" "Does the State Department often hold high officials?" "Exactly how do you hold somebody?"

Despite all the mysteries and pitfalls of that strange Western tongue, China has been swept this year by a passion for English. Elevator boys do not even look up from their phrase books. Students accost tourists in the street. A million copies of a government guide to the English language have sold out in Peking.

"We cannot achieve any of our goals if we don't first learn the ABCs," said Peking's Guangming Daily, dpresenting English as the key to a treasure trove of technoloigical wonders that can bring China's hoped-for modernization. Although the government does not say so, Chinese here also admit that the language can help them discover through shortwave radio the often astonishing outside news, fashions and habits still not reflected in the controlled Chinese press.

For years, the Voice of America regularly advertised English instruction texts in broadcasts beamed at China but received no more than two or three requests a month.

Since early November, with the relaxed restrictions on foreign contacts, nearly 15,000 requests from Chinese citizens have poured into the U.S. Consulate in Hong Kong. Even with the offer temporarily discontinued since January because of a supply shortage, letters still arrive at a rate of 450 a week.

"English is the most useful language in the world, by far," said Wang Doen, an English professor in Canton who returned to China in 1951 after studying at the University of Michigan. "Even the Japanese speak English."

t"I want to be able to understand the foreign books and movies that are becoming available again." said a hotel attendant in Canton. "The People's Daily said the movie 'Star Wars' is about a fantasy world to which many Americans would like to escape because the realities of capitalism are unbearable. Naturally I would like to see this for myself."

The mania for English has not only struck sophisticated cities such as Peking and Canton and this southwestern metropolis but also has spread into the countryside.

The official New China News Agency said 800,000 English language guides prepared by Radio Peking's language instruction broadcasters have been sold in the muddy, rural province of Anhui and another 700,000 in Jiangsu Province.

The news agency said that in Peking "long lines always appear whenever foreign language teaching materials go on sale. People can often be seen memorizing lists of foreign words on buses and in parks."

College students and hotel staff might be expected to devote themselves to learning foreign languages, but many of the young Chinese introducing themselves to American tourists recently have been factory workers.

"I don't use English in my work, but I like to keep it up," said a steel factory worker in Kunming 's Red Sun Square. "I listen to the radio a lot."

Liao Chengzhi, the official spearheading the nationwide language drive, wants English instruction begun in the third grade and estimates China will need 500,000 more primary school teachers able to give foreign language instruction.

More sophistated command of English will be provided by special training courses such as one to be set up soon in Canton, by UCLA instructors. Canton, close to Hong Kong and having a long history of British contact, already boasts the well-equipped Canton Foreign Languages Institute, just outside the city, near White Cloud Mountain.

"Our students are very highly moptivated," said English Department Chairman Gui Schichun. "Only one out of every 100 who apply to us can be admitted." Nearly 65 percent of the institute's 800 students learn English.

They practice British accents, while in northern China many teachers trained by U.S. missionaries give their classes an Maerican lilt.

The Canton institute has modern language laboratories equipped with Sony tape recorders.

"We emphasize audio-visual methods because Chinese universities have tended to produce deaf-mutes, graduates who could read a foreign language but could not speak or understand a word," Gui said.

That may explain some of the bizarre spellings on the big new bill-boards that graced the entrance to this month's Canton trade fair.

One extolled Qingdao beer's delicious "elavor". Another displayed a new brand of "plastic light sandals" and a third advertized Chinese "granite and mapble."

Businessmen at the fair still talk about the waitress who put lemonade on the table and said in perfect English, "Here is your orange juice." The customer shook his head, pointed to the orange-colored name badge on her chest, and said, "That color, orange, orange juice, that's what I want." She smiled and promptly returned with a big glass of milk.

Chinese guides being churned out quickly by language schools here pride themselves on their American slang however.

Yin Shouyu, 25, a guide, constantly warned stragglers in an American tour group to "shake a leg." Someone asked a Canton guide if he and his new bride planned to have children right away.

"No way," he said. "We want to live a little first."

An American instructor at the Canton institute, Majorie Hutchison, had her students read Arthur Hailey's novel "The Moneychangers" to absorb more idioms and new concepts. She said they had trouble with words like "mortgage" and "credit card" but breezed through descriptions in the novel of a power struggle for leadership of an American bank.

"They know all about power struggles," she said. CAPTION: Picture, This Canton sign shows occasional problems Chinese have with English. By Howard Simons-The Washington Post