Chinese Indicate OK of Iran Arms Ban

China, which by official U.S. estimates has sold more than $1 billion worth of arms to Iran, on Tuesday gave President Reagan a carefully qualified commitment to the idea of an arms embargo against the Tehran regime as a means of ending the Iran-Iraq War, the White House announced.

According to presidential spokesman Marlin Fitzwater, Chinese Foreign Minister Wu Xueqian said that China would support a U.N. resolution calling for a halt in arms sales to Iran “if the overwhelming majority of the Security Council believes it should be adopted.”

China’s reported pledge, along with its assurances that it has stopped supplying Silkworm anti-ship missiles to Iran, won an important change in policy from the Reagan Administration.

Secretary of State George P. Shultz officially announced Tuesday night that the United States will lift the freeze it imposed last October on the process of liberalizing controls on exports to China. That action opens the way for China to receive higher levels of technology in computers, telecommunications, semiconductors and other kinds of equipment.

Shultz, who made his announcement during a toast at a Chinese Embassy banquet, also said the United States and China agreed Tuesday to explore the possibility of creating a Peace Corps program in China.

Fitzwater, commenting on Wu’s assertion that China might support a U.N.-sponsored halt in arms sales to Iran, called it “a very positive sign, a very strong expression of support.”

However, a Chinese account of the meeting between Reagan and Wu omitted any mention of an arms embargo or the Persian Gulf, thus casting some doubt on the significance and impact of the White House announcement.

No Veto of Embargo

China, itself a permanent member of the Security Council, previously had said that it would not veto a U.N. resolution calling for an arms embargo against Iran. At the same time, however, China has continued to serve as one of Iran’s principal sources of weapons.

U.S. intelligence officials have said that, in 1987, China was Iran’s leading arms supplier, shipping about $600 million worth of artillery, ammunition and Silkworm anti-ship missiles to the regime of the Ayatollah Ruhollah Khomeini. The U.S. officials said that China sent Iran another $200 million worth of weapons in January and has agreed to supply at least $400 million more later this year.

For China, the motivation behind the weapons sales is said to be the receipt of large sums of foreign exchange for its modernization program. One U.S. official who follows Asian affairs said recently that “if the Iran-Iraq War stops, the Chinese are going to go through a depression.”

China has also sold arms to Iraq, although apparently not as many as to Iran. A senior Reagan Administration official said last week that overall, China is believed to have sold about $2 billion worth of weapons to the Persian Gulf antagonists. The weapons were said to be transferred indirectly through third parties such as North Korea.

The Chinese government has repeatedly denied selling weapons for the gulf war. After Wu’s meeting at the White House on Tuesday, a Chinese Embassy spokesman told The Times: “We do not sell arms to the belligerent parties, Iran and Iraq. We have made efforts to bring about a settlement.”

A White House official insisted Tuesday that there was no contradiction between China’s sale of weapons to Iran and its support of a resolution calling for an arms embargo. Noting that the U.N. resolution has not been approved, the official said that if an arms embargo were to take effect in the future, “we would expect them to live up to their assurances.”

After the White House meeting, Chinese Embassy spokesman Zheng Wanzhen said that the two sides “exchanged views on international matters of common concern as well as the further development of bilateral relations.”

He also said that Reagan reiterated U.S. support for the principle that Taiwan is part of China and that U.S. officials had promised to try to create an environment that would help develop ties between Taiwan and the mainland.

But Zheng said he could not confirm or comment upon the White House contention that China had expressed strong support for a U.N. resolution that would bar arms sales to Iran.

“The reality is that as long as there is a major war going on in the gulf, there will be problems with arms suppliers,” one U.S. official admitted Tuesday. “The United States would like to see arms supplies embargoed, but we have to be realistic about the chances for doing it.”

Said another U.S. official: “Just remember, the Chinese were there (in Iran) before we sent our ships out into the Persian Gulf. They had financial interests and commitments which predate our warships, and they will probably be there after our ships leave.”

After the meeting with Reagan, Wu took part in a second round of talks with Secretary of State Shultz. A State Department spokesman said the two discussed the Middle East, Korea and Taiwan. In addition, he said, the United States made clear once again its concern about human rights in Tibet.

Times staff writer James Gerstenzang also contributed to this story.