Peking straddles the line that divides the two Koreas. China is shifting its position on the two Koreas. In an effort to bolster its economy, Peking is cautiously wooing trade from the South, while still supporting its ally in the North.

Breaking a postwar diplomatic pattern, China is playing both sides of the ideological street that divides North and South Korea. In recent months Peking has unofficially courted investment and trade from the capitalist South while continuing to salute its longtime communist comrade-in-arms in the North.

The seemingly two-faced policy demonstrates how Peking's pragmatic, 10-year struggle to build its economy has subverted its commitment to an orthodox, Marxist foreign policy.

The growing unofficial ties of China and other communist states with Seoul have weakened Pyongyang's position of uncompromising hostility toward the South, Western and Asian diplomats say.

Increasingly alone in its belligerence toward Seoul, Pyongyang is under pressure to halt the harsh propaganda and intermittent state terrorism that have characterized its policy toward the South in the 35 years since the Korean war, according to the diplomats.

``It's in China's interest to safeguard its growing economic ties with the South, and so it's natural that it would urge the North to promote a more stable atmosphere on the peninsula,'' a Western diplomat said.

Chinese Premier Li Peng reportedly told a foreign dignitary recently that Peking supports in principle an initiative announced by Seoul aimed at increasing contact with the North. As part of a July declaration, South Korean President Roh Tae Woo proposed the start of trade and visits.

China approaches ``the question of Korea proceeding from whether a policy is conducive to the stability and peace on the Korean Peninsula and to the peaceful and independent reunification of Korea,'' a Foreign Ministry spokesman said.

Pursuing this more impartial policy, Peking has held to its longstanding style of voicing effusive diplomatic support for the North while in substance pushing for trade and business ties with the South.

The volume of China's trade with the South already is more than three times greater than with the North. Direct and indirect trade reached about $2 billion last year. Diplomats expect trade to increase dramatically, with China offering the South foodstuffs, coal, and other raw materials and seeking investment, technology, and manufactured goods.

A South Korean trade group in July signed an agreement with Shangdong provincial officials that called for the opening of direct shipping routes across the Yellow Sea, the exchange of trade offices, and the launching of a joint-venture bank, insurance firm, and shipping company, according to South Korean news reports.

Peking has also turned a blind eye to boosterism by officials from Liaoning Province. A northeastern province neighboring North Korea, Liaoning established a trade office in Seoul in July. Guangdong Province also plans to open a similar office in the South Korean capital, according to the Japanese Kyodo News Service.

In addition to trade, South Korean technology has lured communist countries away from their North Korea ally. China joined three East bloc countries in July at a six-day workshop on technology transfer in Seoul, according to the South Korean news agency.

Despite the opposition of Pyongyang, Peking Saturday dispatched to Seoul the first of 446 Chinese athletes planning to compete in the Olympic games. It will also allow Korean airliners carrying athletes to fly through Chinese airspace.

Still, Peking has made it clear that contacts will not extend beyond the playing field or above provincial officials and company directors. ``We do not have diplomatic relations with South Korea nor are we going to establish diplomatic relations with it,'' the Foreign Ministry spokesman said.

Rather, Peking has reserved its diplomatic pomp exclusively for Pyongyang. With great fanfare in the official Chinese media, Chinese President Yang Shangkun led a Chinese delegation to Pyongyang to celebrate the 40th anniversary Friday of the founding of the North Korean regime.

The Chinese ``people treasure, as always, the traditional friendship and cooperation [between China and North Korea] and will try their utmost to further develop such friendship which they wish to be everlasting,'' Chinese leaders said.

Peking has warned that the courtship of Seoul by communist nations could make Pyongyang feel isolated, an Asian diplomat said. It has sustained warm ties, wary that in isolation, Pyongyang's totalitarian leader would be less likely to renounce terrorism and reconcile with the South, the diplomat said.

North Korean leader Kim Il Sung hinted Thursday that he may follow Peking's lead away from a doctrinaire adherence to a Marxist foreign policy. Mr. Kim said that Pyongyang should seek economic, technical, and cultural exchanges with capitalist countries, the official New China News Agency reported.