Wham, the first internationally known western pop music group to play in China, dazzled more than 10,000 Chinese tonight in a concert marked by enthusiastic applause and a little dancing in the aisles.

"Absolutely fantastic," an English-speaking university student said. "We can accept this kind of music in China now."

"A touch of freedom," another youth said to a British radio reporter.

Nevertheless, compared with the almost frenzied reaction of some Americans and Western Europeans in the crowd, many of the Chinese at the concert in the Workers' Gymnasium seemed restrained.

George Michael, the British group's 21-year-old, blond lead singer, called on the audience early in the concert to dance and clap to the music. But when some in the crowd responded, it unnerved the brown-uniformed city police stationed at strategic points around the gymnasium.

The police failed in their efforts to get enthusiastic Britons and Americans in the audience to sit down and stop gyrating. Some of them simply booed, and when the police motioned for them to sit down, they twirled and stomped all the more vigorously.

Many Chinese in the audience got their first look at breakdancing when a West Indian dancer clad in white plunged into the crowd to warm up the audience at the start of the show. For a few minutes, a Chinese youth in the audience leaped into the aisle next to the performer and, to the delight of the crowd, kept pace, move for move, with the foreign dancer.

But the heavy presence of the police and their anxious reaction to the wild enthusiasm of the foreigners in the audience had a chilling effect on some Chinese.

"We'd better take care, or we'll never have another concert like this," one Chinese was heard to tell his neighbors.

Wham's appearance here nonetheless seemed to represent another step in China's opening up to outside ideas and influences. Other steps have included official tolerance for western-style dancing, the widespread dissemination of cassettes of songs by Taiwanese and western pop singers and the introduction of more colorful fashions.

But Wham had to undergo careful scrutiny before being invited here. Officials studied the group's albums and videotapes before deciding that its style was what they describe as "healthy."

According to Jazz Summers, the group's comanager, Wham was not asked by the Chinese to cut any of its usual repertoire. But he said that the group was asked to delete a "sexy scene" from a video film that was shown on three giant screens during a 10-minute break in tonight's performance.

"Every western pop group in the world wants to play China," Summers said in an interview before the concert. "I think one of the main reasons why they invited us is that we're not intrusive, not offensive."

Wham's name in Chinese (Wei Meng) translates as "powerful and vigorous." But the critic for the Hong Kong Standard newspaper who watched the group play last week in Hong Kong described Wham as "part of the revolution which is bringing back clean music to the scene, after a rash of let-me-hear-your-body-talk kind of songs."

The closest the singing duo got to being mildly risque tonight was in a song called "Love Machine" and in the opening number, "Wake Me Up Before You Go Go," which contains the line, "It's cold out there, but it's warm in bed."

Chinese officials have been careful to describe the group not as a pop music group but by the more neutral-sounding term, "electronic music group."

The government's approach to such music now seems to be to select performers carefully and to try to channel popular interest rather than suppress it as it has done in the past.

The list of pop groups that have tried unsuccessfully to obtain invitations to play in China is apparently long. The Rolling Stones have been trying to break through this musical bamboo curtain for at least a year.

At one point only a few years ago it would have been unthinkable for any such group to hope to get an invitation to China. Just two years ago, the government issued a booklet called "How to Distinguish Decadent Music," which warned against much the same kind of music as was played here tonight. In 1983, a government-led campaign described western pop music as a form of "spiritual pollution."

Not every Chinese who heard Michael and his singing partner, Andrew Ridgeley, 22, at the concert tonight was thrilled. Some Chinese complained during the two-hour concert that they could not understand the lyrics and that the music sounded "all the same."

The loudest applause of the night came for the song "Freedom," which Ridgeley said was dedicated to China. But in applauding, it seemed that the Chinese were responding more to the song's strong beat than to its title.

Brilliant lighting effects and carefully choreographed and coordinated back-up music and dancing by two female dancers, six singers and eight band members appeared to impress many Chinese.