Cautious reformer in top China post. Will acting premier take the strong steps needed to keep up the momentum of economic reforms?

The appointment yesterday of Li Peng as acting premier places in China's top government post a cautious reformer, well suited to advance economic reform with the prudence recently endorsed by the Communist Party, according to foreign diplomats. Mr. Li, a Soviet-trained engineer, has proven to be a strong advocate of central planning but has backed efforts to raise economic efficiency by exploiting market forces, say Western and Asian diplomats.

``Although Li is a bureaucrat of the 1950s Soviet mold, he is open-minded and favors the looser controls China must enact if it hopes to improve economic performance,'' said a Western diplomat on condition of anonymity.

But some diplomats questioned whether Li will sufficiently support the bold changes of pricing, industrial management, and property ownership that are necessary to prevent the beleaguered reforms from stalling.

Resolute proponents of change are needed among China's leadership to rebuff conservatives who could try to revive stricter controls and eliminate chronic state budget deficits, double-digit inflation, widespread profiteering, and other economic ills, they noted.

The Communist Party, in its 13th congress that ended on Nov. 1, ratified the current measures to improve the economy but fell short of specifying how China will confront two outstanding challenges to greater efficiency: fixed prices and control of state enterprises.

The lack of decisiveness was viewed by some observers as a sign that the leadership has slowed reform.

``Li probably won't hamper the reforms, but there may come a time when the freer economic policies need a strong champion, and he may not have the necessary sentiment,'' said an Asian diplomat, also on condition he not be identified.

Li undercut widely held rumors of his partiality to the Soviet Union and strict central economic control at a Nov. 2 press conference.

Such perceptions reflect ``total misunderstanding,'' he said, adding that ``some people just like to attach labels to others.''

Li's background is laced with traditional aspects of communist orthodoxy. Sent to study at the Moscow Power Institute in 1948, he spent seven years in the Soviet Union.

In addition, he was adopted by late Premier Chou En-lai after Li's father, an early revolutionary, was killed by the forces of the ruling Nationalist Party (Kuomintang) during the Chinese Revolution.

Li's Soviet experience, however, makes him more acutely aware of the pitfalls of a state-run economy, according to a Chinese acquaintance of Li, who spoke on condition he not be identified by name.

As premier, Li will head the State Council, China's top governing body. The State Council consists of five vice-premiers, 11 state councilors, and 45 ministers of various commissions and ministries. However, leading Communist party organs enjoy ultimate power.

The premiership served as a proving ground for the outgoing premier, Zhao Ziyang, who was recently appointed as Communist Party general secretary.

As vice-premier since 1983, Li has administered some of China's most critical government networks, overseeing China's energy needs, raw material production, and transportation.

Li has appeared prominently as a trouble-shooter and a mastermind of large state projects.

In May he was dispatched to Heilongjiang Province to correct a bungled attempt to extinguish the largest fire in China since the Communist Revolution.

When the Yellow River flooded its banks in 1982, Li directed efforts to prevent the river from damaging one of China's largest dams.

But he is also associated, through extensive media coverage, with China's massive coal production schemes, its nascent nuclear energy program, and other large-scale projects.

The appointment of Li by the Standing Committee of the National People's Congress, China's nominal parliament, must receive the perfunctory approval of the 3,500-member congress at a meeting scheduled for the early months of next year.