Fitting China's alphabet into 24 computer keys

How can you fit 22,000 Chinese characters onto a standard English keyboard?

This dilemma has long handicapped the computerization of Chinese-speaking businesses. Even putting the 4,000 to 5,000 most commonly used characters on a computer terminal is no easy matter.

Stan Shih, a young Taiwanese engineer, has teamed up with Prof. Chu Pangfu of the University of the Combined Forces, a military university, to produce and market the Dragon Chinese computer terminal, which can be linked to IBM and other major computer systems.

The Dragon uses a standard typewriter keyboard, with 24 Chinese characters. These 24 keys are sufficient to express the full 22,000-character range of the Chinese writing system. Professor Chu worked out the original concept, and Mr. Shih applied it to producing a marketable computer terminal.

''We're not the first'' to come out with a Chinese-character terminal, Mr. Shih admits. Wang Laboratories has a word processor using a different method of analyzing Chinese characters, the so-called triangle system. The West German company Siemens has teamed up with a Shanghai organization to build and market a Chinese typewriter.

The distinctive feature of the Dragon system, according to Mr. Shih, is that its keyboard is easy to learn and rapid to operate. In two to three months, an operator can type on the Dragon keyboard as quickly as he would on an English typewriter. As a simple example, one key stands for the Chinese word ''sun,'' another for the word ''moon.'' Press them both, and you get the character that stands for ''bright.''

Every Chinese character can be formed in this way, says Mr. Shih, by pressing at most five keys. On an average, only 3.8 keys are needed.

Mr. Shih makes his Dragon terminal in Hsinchu's Science-Based Industrial Park , Asia's first high-technology park. Located about an hour's drive south of Taipei, the park was established by the Taiwanese government in 1980. Shih's company, Multitech Industrial Corporation, is one of the 19 high-technology firms operating in the park.

Hsinchu Science Park is modeled after such high-tech agglomerations as Massachusetts' Route 128 and California's Silicon Valley. It reflects the Taiwanese government's concern to restructure the island's economy away from labor-intensive low-technology industry and into knowledge-intensive high-technology products.

Taiwan annually produces about 25,000 engineers and scientists. Many, however , go abroad for further study and jobs, because there simply is not enough work for them at home. Science Park was the idea of K. T. Li, former minister of the economy and one of the fathers of Taiwan's phenomenal economic growth during the 1960s and '70s.

Today Mr. Li oversees the development of science and technology as minister without portfolio. ''To develop industry further,'' he says, ''we must attract back high-level people (in science and technology) who have jobs abroad.'' Science Park is one way.

Among the 19 companies currently working in Science Park, many are staffed by engineers with doctorates from American universities, some of whom gave up good jobs with Xerox, IBM, and other prestigious American firms.

Mr. Shih's company, however, is entirely homegrown. Mr. Shih himself has a master's degree from Chiaotung University, one of Taiwan's leading engineering institutes.

In 1976 Mr. Shih took the plunge and created his own high-technology company, with a capital outlay of 1 million new Taiwan dollars (about $26,000) put up by him and some of his schoolmates.

Today the company's capital has increased to 60 million new Taiwan dollars ($ 1.5 million at today's rate of exchange) and Mr. Shih has 210 employees, of whom 110 are engineers. Last year Mr. Shih launched a subsidiary in California, and this year he expects to do a $20 million business. Besides the Dragon terminal, Multitech produces a speech synthesizer board (used in cars, it will tell you by voice when you are almost out of gas), and a small computer training device called a microprofessor.