Hanoi's decision to put new men into seven key Cabinet posts is seen here as a long-due promotion for the "second generation" of Vietnamese party leaders and an admission that current economic policies are failing.

Diplomats here stressed that the re-shuffle, confirmed by the official Vietnam News Agency last week, cannot be called a purge and will not bring significant changes in Hanoi's plans to consolidate its control in Cambodia and stand firm against China.

The Vietnamese communist Party, which has just celebrated its 50th anniversary, has maintained rarely challenged unity during the past decades, observers noted. Unlike its counterparts in China and the Soviet Union, it does not have a record of expelling and vilifying high-ranking members.

"The leadership has traditionally closed ranks after a decision is made," said one Western diplomat. "You never hear a peep."

Rumors of an impending change began circulating in Hanoi in January. Interst was piqued by details that Gen. Vo Nguyen Giap, the architect of the Dien Bien Phu victory against the French in 1954 and probably the country's most deeply revered man after Ho Chi Minh, would lose his position as minister of national defense to a younger man.

However, Hanoi's offical announcement indicated Giap, 67, had remained in good graces since he will continue to hold his post as vice premier. In that capacity he is expected to remain active in planning and technological development and is still seen as a prime candidate to eventually succeed Pham Van Dong as premier.

The new defense minister is Gen. Van Tien Dung, who led Hanoi's 1975 offensive that toppled the American-supported government of Nguyen Van Thieu in South Vietnam. Later Dung assumed command of Vietnam's campaign in Cambodia to destroy the Khmer Rouge government of Pol Pot.

Hanoi also announced that Foreign Minister Nguyen Duy Trinh, 79, would be replaced by his deputy, Nguyen Co Thach, more than 20 years his junior. The cultured, English-speaking Thach has virtually controlled Vietnam's foreign affairs since 1978, while Trinh had long been reported seriously ill.

Diplomats noted that both Thach and Dung are closely associated with Vietnam's occupation of Cambodia, which is seen as the root cause of strained relations with China and the five members of the Association of Southeast Asian Nations.

The two men's promotion was seen as new confirmation that Hanoi plans no serious compromise with Cambodian resistance groups or the Chinese. With Pham Van Dong continuing as premier and Le Duan as party secretary, Hanoi's thinking on these and other critical issues will continue on the old track.

Intensified attacks by the Vietnamese in recent weeks against Khmer Rouge forces are cited by observers as further evidence of Hanoi's intransigence.

One year ago, in response to Vietnam's rout of the Chinese-backed Khmer Rouge Army, China launched a 27-day punitive expedition into Vietnam's northern provinces, laying waste to towns, factories and railheads. Negotiations with Peking began shortly afterward, but Vietnam has given no ground in this forum either.

Vietnam continues to warn that China might attack again at any time.

Yesterday, the Foreign Ministy reportedly said the Chinese had sent submarines to violate Vietnamese waters, were building air power in forward bases, and were organizing guerrillas to infiltrate areas inhabited by minority groups.

On the home front, Vietnamese factories and farms have produced far below the party's expectations, leading foreign specialists to describe the economy as a "shambles."

Foreign currency reserves are almost exhausted. Rice and other basic commodities are tightly rationed, exports are slowing down and most foreign aid from Western countries has been curtailed as a protest against the Cambodian invasion. Recent visitors to Hanoi have reported the standard of living appears to have fallen markedly since 1976.

Signs that the leadership wants to revise development policy have long crept into the country's official media. In a lengthy speech marking the party's 50th anniversary, Le Duan said that "achievements were limited by shortcomings and weaknesses in management of the economy." The Vietnamese, he said, would have to "tighten their belts to build the initial bases of socialism."

These and other remarks refer to the current five-year plan, the purview of Le-Thanh Nghi as chairman of the State Planning Commission. Feeble and approaching 70, Nghi has long been a target of criticism, analysts said. Western diplomats who called on him recently found him either unwilling or unable to discuss economics seriously.

Nghi was replaced by Nguyen Lam, 57, a man said to be experienced in tax administration. Hanoi's initial announcement said Nghi would continue as vice premier. Then two days later, as if to underscore official displeasure with him, the media issued a clarification stating he would not retain that post.

Precisely where he will go is unclear. However, press acknowledgement yesterday of his presence at a reception to welcome a Czech delegation indicates he will retain at least ceremonial importance. The shuffle brought new men into control of three other ministries: foreign trade, transportation and communications, and interior. Transfers at the first two were assumed to be linked to Nghi's removal. Diplomats had no ready explanation for the change at interior, which oversees local administration and domestic intelligence. The new minister, Pham Hung, is also a vice premier.

The new Cabinet has not indicated precisely how it will attack the economic problems. It is expected at the least to keep in force streamlining measures inaugurated last year. Recent visitors to Hanoi were told of new tolerance of "free market" production and sale of food and handicrafts, loans to individuals from state banks to get up small businesses, and permission for factories to deal directly with foreign buyers rather than going through cumbersome official channels.

Few observers expect any structural changes. "It will just be tinkering with the socialist systems," said one Western diplomat who follows Vietnam closely.

He feels the party leadership is making scapegoats of economic planners who face an impossible task bringing prosperity to an already devastated country fighting a ruinous war in Cambodia and guarding its border against the Chinese.