World Bank Lending Drops in Fiscal 1990 : Economic aid: Some of the decline is laid to reduced loans to China in the wake of the Tian An Men Square massacre.

Lending by the World Bank, the biggest source of aid to the Third World, has declined in the past 12 months for the first time since 1985, the bank reported Thursday. The decrease was partly because of a reduction in loans to China after tanks rolled into Tian An Men Square last year.

Figures for the bank’s year, which runs from July 1 to June 30, were made public by Moeen A. Qureshi, a Pakistani who is the bank’s senior vice president for operations.

New loans for the year just ended came to $20.7 billion. That was $600 million less than the $21.3 billion the year before.

Loans to China dropped by more than $700 million, falling to $590 million from $1.3 billion in the year before the suppression of the democracy movement.

Just after the Chinese government moved its military forces against demonstrators, Bank President Barber B. Conable Jr. withdrew $780 million in loans for China from consideration.

Then President Bush asked the bank to halt lending to China. Later, there was international agreement that new loans should be limited to basic human needs.

The past year also brought a large drop in World Bank lending to India, where loans fell to $1.9 billion from $3 billion the year before. But bank officials said that was a coincidence and not the result of policy.

Mexico displaced India as the biggest borrower, taking $2.6 billion, compared to $2.2 billion in the previous year.

Lending by the bank had been rising steadily and is expected to increase again in the next 12 months.

The bank is playing a much bigger role in what used to be considered the “Second World,” European countries that have been under Communist rule.

“We have initiated lending to Poland for a total of some $780 million this fiscal year . . . and have continued our programs in Hungary,” Qureshi said at a news conference last week.

“We are preparing support programs for Bulgaria and Czechoslovakia, both of which are expected to become bank members in the coming year, and are ready to resume our activities in Romania.”