The Reagan administration is planning to permit sales of more sophisticated technology to China, treating its requests in the same category as "friendly, nonallied" nations, according to well-informed diplomats.
The plan would enable Peking to acquire higher levels of electronics, know-how and computers--all with military potential, the diplomats said. Currently, sales are limited by a more restrictive classification devised two years ago giving China greater access to U.S. technology than the Soviet Union and its allies but less than friendly countries, such as Egypt.
China hotly protests its designation as too shackling to allow a free flow of the equipment it needs for modernization. Frustrated by long bureaucratic delays, it often flails at Washington while threatening to shop for technology in Japan and Europe.
Commerce Secretary Malcolm Baldrige publicly pledged during a visit here last week to speed up Peking's requests for high technology within the limits set in June 1981.
But the administration plan being formulated privately would go much further in the hope of salving bilateral strains and saving business for American companies, according to diplomats. China would be shifted to the more liberal category that includes allies and such "friendly, nonallied" nations as Egypt and Indonesia.
Not only would Peking's applications be processed much faster under the "presumption of approval" policy for this category, but the qualitative ceilings on technology would be raised far beyond current limits for China, the diplomats said.
The new rules would qualify China to buy certain items it is known to be seeking, among them integrated circuit fabricating equipment, software for computer-aided design and manufacture and high-speed computers. Such equipment is designed for civilian use but can be adapted to military functions.
Even within the more liberal designation intended for Peking, it still would be subject to certain guidelines, now being drafted, making technology transfer more restricted than it is for U.S. allies. Such guidelines are drawn up specifically for each nation, depending on its relationship with the United States.
When China was exempted from the technology ban imposed on the Soviet Bloc, it was touted as a strategic partner with the United States against Moscow. The administration declared at the time that it is in the U.S. interest to "foster a strong, secure and friendly China."
Since then, Peking has begun mending fences with Moscow while growing increasingly estranged from Washington. Communist officials are most angered by continued U.S. arms sales to the rival government on Taiwan, but they frequently cite restrictions on technology sales as evidence of unfriendly U.S. behavior.
Until recent weeks, pragmatic Chinese leader Deng Xiaoping has sought to isolate the nagging political problem of Taiwan from the generally healthy economic relationship developing between the two countries.
But the souring of political ties initiated by Taiwan and intensified by a series of other issues--U.S. granting of political asylum to tennis player Hu Na, China's liability to U.S. citizens for imperial Chinese railway bonds, U.S. import quotas on Chinese textiles and Pan American Airways' plans to resume air links with Taiwan--has recently spilled over to the economic sphere.
Claiming retaliation for the U.S. textile curbs, China decreased imports of U.S. farm products 80 percent in the first quarter of this year compared with the same period of 1982.
Fifteen U.S. oil companies were bypassed in China's first round of offshore oil drilling contracts in the South China Sea, won by a group of companies headed by British Petroleum. A Japanese company is said to be in line for the next contract.
Peking has stepped up efforts to expand economic ties with the European Common Market and agreed in principle to buy a pair of nuclear reactors from France for a power station in the south.
A senior Foreign Ministry official meeting last week with American sinologist Parris Chang was asked if Peking feared losing the economic benefits of good relations with the United States, according to Chang.
"China needs nothing from the Americans," the official reportedly said.
It is unclear whether a liberalized administration policy on high technology would reverse the damage done to economic ties.
The official reaction to Baldrige's visit was upbeat, although Chinese leaders have become wary of U.S. promises, reducing them in general to the classical phrase, "loud thunder, little rain."