The laotian government is preparing its people and mobilizing its Army for the possibility of war with the Chinese, who are described by officials here as "intent on destroying our new government."

The laotian claim last month that China had invaded a small part of its northern border was a prelude to an intense anti-Chinese propaganda campaign drive. Everyone from the highest to the humblest rank has been schooled at local "political meetings" on what is called an imminent Chinese threat.

Similarly, the Laotian government has begun drafting about 13,000 soldiers, a dramatic increase to the small national force of about 50,000. The Laotian Army is under military alert.

Laos, a nation of 3 million, is becoming increasingly bellicose toward its neighbor of 900 million because of Vientiane's alliance with Vietnam. Vietnam is said to have at least 40,000 troops stationed here and many have been seen moving toward the Laos-China border since Laos began claiming that the Chinese had invaded.

The Laotians have become so sensitive about these foreign troops that on a recent visit to the northern Xiang Khouang Province, a group of journalists were forbidden to photograph the Vietnamese soldiers.

Until last autumn, Laos had quietly stayed out of the war of words and bullets surrounding Indochina. Even though it shares borders with China, Vietnam and Cambodia, Laos had kept up a semblance of neutrality. With the Vietnamese invasion and takeover of Cambodia, however, and with the Chinese invasion of Vietnam, Laos has abandoned neutrality.

Laotian troops are now fighting in Cambodia with the Vietnamese and their Cambodian allies against the remaining Poi Pot resistance troops, well-placed Western sources report. In the northern reaches of Laos, they add, the Soviet Union has installed major military installations for defense and intelligence gathering.

Laotian charges that China is manipulating ethnic Chinese, using minority hill tribes for sabotage and planning an invasion, are almost identical to Vietnamese charges last year before the Chinese invasion of Vietnam. South Srithirath, director general of the Foreign Ministry, said the threat of war was even more urgent. "Should there be another war between China and Vietnam, Laos will be part of it," he said.

To many Asian and foreign observers, it appears that Laos may become the new focus of the continuing struggle for dominance in Indochina. "China lost big in Cambodia and Vietnam is becoming overstretched. There is a general mobilization campaign in Vietnam but that can't help. The most vulnerable and easiest country for Chinese interests right now is Laos," said a European diplomat.

Laos, however, is anything but a militaristic state. Even during the war, in the 1960s, much of the fighting was done by the ethnic hill tribes of Laos, not the Laotians themselves. This month, the leaders of Laos staged an elaborate ceremony to honor the living heroes of the country, a rare event. Veterans and soldiers were brought to Vientiane from all the provinces and at an early morning reception at the capital's main square these men and women received medals on bright pink and blue ribbons to decorate their khaki shirts.

On an airplane shortly afterward, I traveled with some of these combatants to the north. One elderly ethnic Hmoung was pleased to show me his new decorations and give his opinion of the looming Chinese threat. "I am not afraid of the Chinese. I can beat any Chinese soldier," he said.

But there are 900 million Chinese," I said.

"That doesn't matter," he said, and disappeared to go back to his life as a farmer.