BEIJING, JULY 29 -- Chinese President Li Xiannian told Japanese legislators today that he wants to step down from the ruling Politburo in October, according to Japanese sources.

Western diplomats said Li's disclosure sets the stage for the rise of younger leaders under the tutelage of Deng Xiaoping, the country's top leader.

They said Li's statement showed that Deng was outmaneuvering his opponents and succeeding in his efforts to shake up the Politburo's five-man standing committee, China's highest decision-making body.

Deng, 82, earlier had indicated that he would retire from the standing committee at a crucial Communist Party Congress scheduled to be held in October but would continue to hold some other posts.

This was taken as a sign that Deng was attempting to force Li and the conservative economist, Chen Yun, out of the standing committee as well.

The ailing Chen, 82, has questioned the scope, pace and side effects of the economic reforms that Deng has introduced.

The 81-year-old Li is considered more of a moderate on economic reforms. But Deng might feel that he needs Li's retirement to secure standing committee positions for younger, more energetic advocates of his reforms.

Li's position as president is a largely ceremonial one but illnesses have kept him out of public circulation for weeks at a time during the past year.

Japanese sources, who asked not to be identified, said that Li told Japanese legislators today, "I want to join the rear guard."

"I want to resign from the Politburo and the standing committee," Li is reported to have said in his meeting with a Japanese Socialist Party delegation led by Makoto Tanabe, former secretary general of the party.

In addition to Deng, Chen and Li, former party chief Hu Yaobang is also expected to retire from the standing committee at the October party congress.

Diplomats said Deng had told West German Chancellor Helmut Kohl earlier this month that four members of the standing committee would retire, with acting party chief Zhao Ziyang being the only one to retain his place on the committee.

The top party leadership still appears undecided about which younger leaders should be elevated to positions on the standing committee. Most important is the question of which of the younger leaders is to replace Zhao as premier.

The power struggle focusing on such issues recently shifted to the beach resort of Beidaihe, about 180 miles east of Beijing. It is here that China's leaders meet each July and August to rest, swim and debate political and economic issues.

A well-informed Chinese source said the main issues being debated at Beidaihe this summer are political ones.

Party conservatives, who are also described by some observers as hard-liners, gained influence earlier this year during and following a series of student demonstrations and the forced resignation of Hu Yaobang. But their influence appears to have receded in recent weeks.