China and Indonesia agreed yesterday to begin normalizing their frozen relations, ending 18 years of official silence between two of Asia's largest nations.

Indonesian Foreign Minister Mochtar Kusumaatmadja told reporters last night that he held very frank and thorough discussions with Chinese Foreign Minister Wu Xueqian and that both sides expressed their desire to enhance mutual understanding and friendly relations.

Wu arrived Monday in the first official visit by a Chinese Cabinet minister since l967, when Indonesia broke relations with Peking after an abortive Communist coup in 1965 that Indonesia accused China of backing.

Mochtar met Wu after the opening session of a commemoration of the 30th anniversary of the l955 Asian-African conference in Bandung that launched the Nonaligned Movement. Wu also shook hands with Indonesian President Suharto during a reception for chief delegates of about 80 Asian and African nations in Bandung for the event, and he has asked for a formal meeting with the Indonesian president.

Mochtar told reporters outside Wu's hotel room in Bandung that the step-by-step moves toward normalizing ties between the two countries will be spelled out in a memorandum of understanding that the two foreign ministers will sign before Wu leaves on Friday.

The most concrete move toward normalization will be the resumption of direct trade, which also has been frozen since 1967. The two countries have had modest trade exchanges through Singapore and Hong Kong during the past 18 years. Indonesia, a member of the Organization of Petroleum Exporting Countries, is now anxious to increase nonoil exports to China to compensate for lost revenues because of falling world oil prices.

The two foreign ministers also talked about the conflict in Cambodia. Wu told reporters though an interpreter, "We discussed trade and Kampuchea [Cambodia] in a very friendly atmosphere. Both sides expressed their points of view, and we agreed to improve relations through direct trade."

Indonesia long has maintained that China should disavow formally its support for underground communist movements in Southeast Asia as a condition for normalizing ties.

Wu earlier told reporters that China no longer has any contacts with the banned Indonesian Communist Party and that China has pledged not to interfere in the internal affairs of Indonesia, in line with the 10 "Bandung Principles" adopted at the l955 Asian-African conference.

At that conference, China's premier then, Chou En-lai, and Indonesia's late president Sukarno began what was to have been a 20-year era of close relations, climaxed by Sukarno's proclamation of a Jakarta-Peking axis in l964.

But that alliance came to an abrupt and traumatic end the following year after the abortive coup. At that time, the 3-million-member Indonesian Communist Party was the third largest in the world.