Congress cleared the way yesterday for the first government-to-government military sale to China, freeing the Defense Department to offer as much as $98 million worth of technology and equipment to modernize Chinese production of artillery ammunition.

Pentagon officials described the sale as a breakthrough in the slowly evolving military relationship between the two countries, establishing a basis for transfers of more sophisticated military equipment.

"It's a precedent and breaks the ice," a defense official said. "Up to this point, there's been a lot of talk and not much progress."

Officials of both nations have long discussed possible sales of TOW (tube-launched, optically tracked, wire-guided) antitank missiles, naval sonar, air defense missiles and avionics. But Peking, hard pressed for foreign currency and anxious not to alarm the Soviet Union, has been slow in making specific requests.

China's request last summer for a $6 million package of ammunition-plant blueprints and designs was the first under the U.S. Foreign Military Sales (FMS) program, which requires special licensing and formal congressional notification.

Congress was notified Sept. 30 and had 30 days to reject the deal. Its failure to act by yesterday automatically signaled approval.

Officials said the Pentagon will formally offer Peking technology, equipment and assistance being sought to produce artillery ammunition, primers, fuzes and explosives. They said the original request could grow to $98 million.

The sale is seen as a test of congressional opposition by supporters of the rival Chinese government on Taiwan. Pentagon officials said the ammunition deal was chosen as the pilot case because it is less sensitive than the other military equipment under discussion and had a better chance of congressional approval.

China has bought U.S. civilian equipment with military application, including 24 S70C2 Sikorsky helicopters, but those purchases were company-to-government commercial deals and did not involve items listed under the FMS program.

In June 1984, President Reagan formally qualified China for government-to-government sales by determining that such military transfers "strengthen the security of the United States and promote world peace."

Although China claims to be independent of both superpowers, it defends heavily militarized borders with the Soviet Union and Vietnam.