The United States and China are close to agreement on resuming military contacts, which were suspended by Beijing after the May 7 bombing of China's embassy in Yugoslavia, sources here said.

Following the visit of U.S. Undersecretary of State Thomas Pickering to China last week, Chinese officials indicated that they were ready to resume those ties, the sources said. This would mark a major step in repairing U.S.-China relations.

Sources said Lt. Gen. Xiong Guangkai, a deputy chief of staff of the People's Liberation Army, could travel to Washington as early as December. Xiong would be visiting the United States for the third in a series of annual consultations started by the Pentagon and China's Defense Ministry. Xiong, the former chief of military intelligence who is believed to be close to President Jiang Zemin and is known for his somewhat anti-American views, is considered the gatekeeper on U.S.-China military ties.

Two sources stressed that Xiong's trip is still in the planning stages. It appears, they said, that China's all-powerful Standing Committee of the Communist Party Politburo has yet to meet to approve the visit formally. One source said Xiong's trip might be delayed until January.

In response to the attack on its embassy in Belgrade, China suspended its dialogue with the United States on arms control and human rights and shelved high-level military contacts. It canceled a visit by the outgoing commandant of the U.S. Marine Corps, Gen. Charles Krulak, and Defense Secretary William S. Cohen.

China took these actions after American planes destroyed China's embassy and killed three Chinese citizens living in the building during the NATO air war over Yugoslavia. The U.S. government said the attack was an accident. China's state-run media, led in part by the military, charged that the bombing was deliberate, and a week of anti-American protests erupted in Beijing and other cities. Washington has paid compensation to the families of the embassy victims and is discussing payment of damages to Beijing for the building.

A resumption of visits, however, will not mean that U.S.-China military ties are entering a new period of cordiality. Many issues divide the defense establishments of the two countries--including theater missile defense, Taiwan, closer U.S. defense ties with Japan, continued Chinese missile technology exports to Pakistan and other countries and China's close military links with Russia.

However, one Chinese analyst said the U.S. Congress' decision to postpone until next year consideration of the Taiwan Security Enhancement Act, legislation that would strengthen U.S. military ties with Taiwan, could help improve military ties between Beijing and Washington. Beijing contends that Taiwan, which has its own democratic government and a strong economy, is a province of China and condemns any American arms sales to Taiwan as interference in its internal affairs.

Other divisive issues involve what American officers say is the unequal treatment of American and Chinese officers visiting each other's country. When U.S. officers come to China, they say, the Chinese show them insignificant installations, provide hackneyed security briefings and limit access to line officers. When Chinese officers go the United States, they often are treated to in-depth briefings and sometimes are given tours of sensitive military facilities.

In some areas, there appears to be hope for cooperation. China has said it firmly opposes the development of nuclear weapons on the Korean peninsula and has made at least limited efforts to encourage North Korea to forgo testing a second ballistic missile. A North Korean missile test in August 1998 sent shock waves through Asia and contributed in part to Tokyo's decision to approve closer military ties with Washington.

Signs of a thaw emerged earlier this week in Hong Kong when China's Ministry of Foreign Affairs approved a port visit for the first U.S. Navy warship since China suspended ties. The destroyer USS O'Brien called at Hong Kong's port on Oct. 31. Since China suspended ties, 10 ships have been blocked from making Hong Kong port calls. China has approved two other American ships--an oiler and an ammunition vessel--but neither was a warship. So far, the foreign ministry has yet to permit American surveillance planes to land in Hong Kong. It has allowed five other U.S. military flights to land.