In another indication of the steadily growing Sino-American military relationship, Adm. James D. Watkins, the U.S. chief of naval operations, disclosed today that experts are discussing ways in which the United States could help modernize the Chinese Navy. He also expressed optimism about a possible U.S. Navy port visit.

Watkins, on his first visit to China, said a team of U.S. Navy experts is in China talking with the Chinese about their use of American-made antisubmarine warfare equipment, including sonar and torpedoes, and sophisticated LM2500 gas turbine engines.

The engines are said by Navy specialists to be the best of their kind. Last August, General Electric Co. agreed to sell five of them to the Chinese for use on their destroyers.

Watkins said the U.S. Navy was "very encouraged" by a recently concluded agreement with the Chinese for the sale of $500 million worth of U.S. electronics to give an all-weather capability to China's F8 fighter jets. The Reagan administration earlier this month notified Congress of the impending sale, which would be by far the largest U.S. military sale to China to date. The F8 modernization will include radar, computers and navigation equipment.

In an unusual public discussion of sensitive defense issues by such a high-ranking officer, Watkins told reporters that the F8 sale, once completed, would be a "landmark" and could be the forerunner of "a flow" of technological equipment and know-how to the Chinese Navy.

Some observers cautioned that the Chinese have a history of expressing interest in arms sales from western nations and then backing off once the costs become clear. Few contracts actually have been signed, and the Chinese have said they are hindered by a shortage of funds.

The progress in defense cooperation between the United States and China reported by Watkins seemed to indicate that despite a recent improvement in relations between Peking and Moscow, the Chinese still consider the Soviet Union a security threat. The Chinese are reluctant to talk publicly about their defense relationship with the United States and have a tradition of keeping military matters secret. They also seem to be trying to avoid provoking the Soviet Union or giving the appearance of tilting toward either superpower.

Watkins said that during his 10-day visit to China, which began yesterday, he did not intend to raise the sensitive issue of a possible U.S. Navy port visit to China. Such a visit had been expected in May 1985 but was postponed after Communist Party General Secretary Hu Yaobang said that U.S. ships would not be carrying nuclear weapons when they made the port call. The longstanding U.S. policy is neither to confirm nor deny that U.S. ships are carrying nuclear weapons. In the end, the two sides failed to reach agreement on a port call.

But in today's press conference, Watkins sounded optimistic about the prospects for a port call, which would be the first to China by U.S. warships in nearly four decades. China recently gave another nuclear power, Great Britain, the go-ahead to send two warships on a goodwill visit to Shanghai in July. The British have the same policy as the United States about confirming whether their ships carry nuclear weapons, and in this case, it appeared that the Chinese sought no assurances from the British on the issue.

Agreement on the visit by British ships was a "hopeful sign," Watkins said, "and the United States applauds that." But Watkins said that he did not intend to raise the issue during his visit because he felt that it was important to allow the issue to evolve naturally.

In answer to questions, the Navy chief revealed the details of a "passing exercise" conducted by the U.S. and Chinese navies in the South China Sea three months ago. At the time, the official New China News Agency made a brief mention of the exercise, saying that vessels from the two navies met and exchanged greetings.

Subsequently, a Chinese Foreign Ministry spokesman played down the importance of the meeting at sea Jan. 12 by denying that it had constituted an exercise. The spokesman made it sound as though ships from the two navies met by accident. But Watkins described the exercise as a planned event lasting for "maybe four or five hours," during which ships of the East China Sea Fleet and the U.S. 7th Fleet met, sent signals to each other, exchanged messages and "did some maneuvering in columns."

Some members of Congress have opposed the U.S. support for China's defense modernization program on the grounds that it threatens Taiwan. But Defense Department officials argue that it does not, contending, for example, that the F8 fighter is a high-altitude interceptor designed to counter Soviet bombers. They say that antisubmarine equipment would not threaten Taiwan because Taiwan does not have a submarine force.