Warming Up to the `Big Polar Bear'. Beijing is confident of Gorbachev's power to redirect Soviet foreign and military policies. SINO-SOVIET RAPPROCHEMENT

BEHIND the walls of the gigantic Soviet Embassy compound in Beijing, workers are busily building new apartment blocks at what is already the Soviet Union's largest mission in the world. Though the sprawling Embassy compound in northwestern Beijing already houses some 500 Soviet citizens, by far the biggest diplomatic contingent in China, Soviet diplomats say they need room for more.

As Sino-Soviet relations move rapidly toward full normalization, with a summit between senior Soviet and Chinese leaders, Mikhail Gorbachev and Deng Xiaoping, expected mid-May, signs of expanding contacts between the world's largest communist states are everywhere.

In Beijing's generously stocked free markets and department stores, Soviet shoppers snap up basic consumer goods that at home are scarce and often at the end of a long line.

Hundreds of Soviet trade delegations are visiting China's northeastern provinces to drum up business, while more than 1,000 Chinese laborers recently began working at Soviet logging camps, construction projects, and vegetable farms in Siberia.

Along the Sino-Soviet border, where fierce territorial clashes erupted in the late 1960s, Chinese soldiers hosted Soviet troops not long ago at festivities marking the 61st anniversary of the founding of China's Red Army.

Behind this flurry of renewed exchanges, Chinese and Soviet leaders are carefully mending a relationship that in the past 40 years has plummeted from the peaks of comradely good will to the depths of suspicion and war.

Several factors have aided the Sino-Soviet rapprochement, one of the most dramatic diplomatic shifts of the 1980s.

Most significantly, China's leaders have grown increasingly confident that Soviet leader Mikhail Gorbachev possesses the will and power to redirect Moscow's foreign policy and military strategy toward less threatening aims.

``The Chinese have come to trust Gorbachev,'' a Western diplomat said. ``They've studied him for two or three years and feel he's sincere.''

Longstanding Chinese fears of Soviet encirclement have been assuaged by Gorbachev's agreement to destroy SS-20 missiles in Asia, withdraw most Soviet troops from Mongolia, end the occupation of Afghanistan, and urge Vietnam to quit Cambodia.

``Gorbachev has shown his sincerity about improving Sino-Soviet relations,'' commented the pro-Beijing Hong Kong newspaper Ta Kung Pao. The Soviet leader has ``gradually cleared up the Chinese fear of the `big polar bear,''' the paper said.

In a sign of growing trust, China in December agreed to join the Soviet Union in forming a group of military and diplomatic experts to seek ways to reduce armed forces along the Sino-Soviet frontier, official press reports say. The military experts plan to meet before the summit to work out ways to cut back offensive forces along the border, alert the other side of troop movements and exercises, and refrain from massing troops in any one area.

China is already planning to redeploy troops away from the Soviet border, possibly moving them south toward Indochina where tensions are higher, Asian and Western diplomats say.

Beijing has assured Moscow that it will not form an anti-Soviet alliance with Washington. Mr. Deng seemed to refer to that pledge last fall when he told the Romanian party leader: ``The message we asked you to convey [to Gorbachev] three years ago seems to have produced results. A Sino-Soviet summit may take place next year.''

Moscow and Beijing have also improved ties as they abandon ideologically rigid foreign policies for a pragmatic brand of diplomacy designed to help them cut military spending and build their economies in peace.

``When we decided on the domestic policy of [economic] construction, we adjusted our foreign policy,'' said Mr. Deng. ``You can't engage in construction without a peaceful environment.''

Since China launched a program of market reform in 1978, it has reduced its military manpower by 25 percent, eased tensions with neighboring states, and expanded trade and diplomatic ties with both capitalist and socialist countries. Similarly, Gorbachev's pursuit of perestroika (restructuring) has led him to reduce Soviet military entanglements and defense spending while promoting political and economic cooperation with once-estranged nations like China, Japan, and Asia's new industrial powers.

A third force drawing Beijing and Moscow together is their common drive to revitalize their socialist systems. Both nations seek to compare notes as they tackle similar problems of economic inefficiency, bureaucratic corruption, and overcentralized power in the Communist Party.

The normalization of Sino-Soviet relations, in addition to adding impetus to already flourishing trade, cultural, and scientific exchanges, will bring new cooperation on the diplomatic front, Chinese and Soviet officials say.

Beijing and Moscow plan to begin regular, high-level talks on global issues, and to work together on reducing conflicts in Indochina, the Korean Peninsula, and other regions. The Chinese and Soviet militaries are likely to exchange visits, with such symbolic gestures of friendship as naval ship calls, according to Western and Asian diplomats.

Though Beijing and Moscow are eager to reap the gains from what they call ``a new type of relations,'' both stress there will be no revival of their 1950s alliance. Chinese leaders are aware that any hint of a strategic link with Moscow could damage valued ties with the United States, Japan, and other Asian nations.

``China will try very hard not to annoy the United States,'' said a scholar affiliated with the Beijing Institute for International Strategic Studies.

As the weaker party, China is particularly wary of dependence on either superpower, having suffered the drawbacks of such reliance in recent decades.

During the cold war, Mao Zedong waged a rigidly pro-Soviet, anti-American diplomacy. In 1950, Beijing and Moscow signed a 30-year peace treaty. In return for military backing and massive economic aid, China supported almost every Soviet diplomatic initiative. But soon ideological strains appeared. Nikita Khrushchev's denunciation of Joseph Stalin in 1956 shocked Beijing. Moscow later denounced Mao's 1958 communization drive.

The rift widened in 1959, when Moscow broke an accord to help China develop atomic weapons. Later that year, Khrushchev visited the US, an act Beijing viewed as the ultimate betrayal. In 1960, Moscow recalled all Soviet technicians and factory blueprints from China. Relations dissolved into open acrimony; border clashes erupted in 1969.

In the 1970s, China entered a narrow, strategic relationship with the US. But by 1981, Beijing felt its closeness to Washington had grown constraining and detrimental to third-world ties. That year, Beijing unveiled an ``independent'' foreign policy.

Today, China is striking a more balanced relationship with the superpowers for the first time in its communist history.

First in a four-part series on Sino-Soviet relations.