China is its own worst enemy. Much of the very bad publicity it has received lately is ascribable to a lack of knowledge of the outside world on the part of its top leadership, in part abetted by the West itself.

In addition, the leadership's determination to remain in power at any cost regardless of the mood of much of the country has alienated many around the world.Despite China's transgressions, the long-run national interests of this country still are best served by yet another extension of most favored Nation treatment.

Recent reports of Chinese missile launchers in Pakistan and Chinese aid to an Algerian nuclear reactor, despite China's pledges to abstain from such aid; of Chinese prisoners being used to produce exports; of Chinese pirating of U.S. software and other intellectual property; and of China's ballooning trade surplus with the United States come in addition to the ongoing American revulsion over human rights violations in China, especially since the 1989 Tiananmen Square massacre. These are serious infractions of international agreements and Western mores. They should not be permitted to pass unchallenged.

Canceling MFN treatment for China, however, is not the best way to instruct China in the ways of the West or to help it become a member in good standing of the world community.

Such a cancellation would so diminish bilateral trade that it would remove the one real instrument of influence the United States has - access to the U.S. market.

It would in addition do irreparable harm to Hong Kong, a trading partner whose commercial policies more than those of any other in the world meet the norms laid out in international trade agreements.

It would do so at a time when Hong Kong is struggling to cope successfully with its approaching (1997) reunification with China. Further, canceling MFN would do great damage to those parts of China (the coastal provinces) where the market mechanism and private enterprise have made the most progress and have managed to continue to thrive despite leadership attempts since 1989 to restrict their operations. Finally, canceling MFN is most unlikely to effect any significant change in China's human rights record and could make it worse.

Rather than canceling MFN treatment for China, the United States should make further extensions conditional upon evidence that China is willing to abide by international agreements in general as well as show progress in conforming with the rules for international commerce established by the GATT.

Making MFN treatment for China conditional upon changes in China's behavior in regard to international agreements and mores would provide strong encouragement for China to adjust to the world rather than asking that the world adjust to China.

Rapid development of the Chinese economy on the basis of open markets and free enterprise is in the best interests of the Chinese people, the United States, and the rest of the world. China is large enough in the world economy to make a difference in world economic development, provided China's growth and trade are conducted according to world rules.

Standards of living throughout the world could be raised by rapid development in China. But Chinese behavior must indicate that it is willing to play by Western rules and mores. A change in behavior, including respect for human rights, is essential before China can resume its rightful place in the world, as it very much wants to do.

(Penelope Hartland-Thunberg, a senior associate of the Center for Strategic and International Studies, is author of "China, Hong Kong, Taiwan & the World Trading System," St. Martin's Press 1990.)