The People's Republic of China has one major goal in the 21st century - economic growth, and with it increasing prosperity for its vast population. A stable global economy and unimpeded trade flows are enabling conditions for such growth. Local and regional disputes and conflict are entirely counterproductive and damaging, as are what China views as international threats, sanctions and armed intervention on the part of "hegemonist" powers and alliances employing military force to impose their particularistic goals and values. After Mao's death in 1976 China embarked upon its "second revolution" with the abrupt switch from the previous obsession with ideology, which culminated in the Cultural Revolution, to economic pragmatism and the accompanying policy of "opening up to the outside world." Since then the Communist Party leadership has repeatedly declared that its priority is to ensure an ever-expanding economy capable of providing employment for the hundreds of millions of peasants flooding into the urban areas. Rural families constitute 80% of China's prodigious population. The modernization of land usage and traditional agriculture is uprooting hundreds of millions of peasants and propelling them from the countryside into urban areas in search of work and wages that can be remitted to their families back in the villages. THE PARTY openly holds that not only China's internal stability and unity but also its own popular legitimacy and authority depend upon its success in coping with these economic and social transformations. Territorial and other historic squabbles with China's neighbors, which tend to be a focus of international attention, have long been demoted in the hierarchy of China's national priorities. The highly-sensitive Taiwan issue - involving a province Imperial China ceded to Japan in 1895, when China proved powerless to hold back the surge of Japan's aggressive seizures of territory in East Asia and the Pacific - is largely seen as an issue of democracy and self-determination. For China it involves its territorial integrity, eroded by colonialist aggression throughout the "century of humiliation" which began with the seizure of Hong Kong in 1841 and the "concessions" forced upon Chinese coastal cities and ports by colonialism throughout the 19th century. Yet the resolution of the Taiwanese problem can be postponed for "100 years" in terms of China's priorities today, as Mao, Deng Xiaoping and their successors have repeatedly assured their Western interlocutors. The only face-saving condition is that all concerned observe the status quo and the basic rules of the game, namely, continued public acceptance of the principle of One China and historic unity. The current Taiwanese leadership came to power advocating declarations of Taiwanese independence, deliberately provoking Beijing, and that at a time when official Washington was not inclined to be sympathetic to China's sensitivities. In the recent Taiwanese municipal elections this new leadership party lost support to the Guomindang - the very party which had held power since its leaders fled to Taiwan from the mainland in 1949 - and which, far from seeking to provoke Beijing, is far more amenable to mutually acceptable formulas. Taiwanese business has voted with its pocket-book for coexistence with Beijing. It has made vast investments in the mainland, perhaps as much as a $100 billion, and very large sectors of Taiwanese manufacturing have been moved to the mainland.There is now some hope of a return to a less challenging atmosphere in Taipei and an end to the threatening responses from Beijing. CHINA'S POSITIONS on international problem areas such as Sudan, Iran and our own immediate neighborhood can only be understood in terms of its view of the need for a stable international environment to facilitate free flows of trade, raw materials and oil. In this view of the world, Sudan and Iran are trading partners, not societies to be condemned for their value systems and ideologies, or how they treat their own peoples. Interference and intervention can only impel such countries to irresponsible international behavior and non-cooperation, destabilizing the global economy and markets, as well as posing a threat to international security. NOR CAN China understand what it views as United States interventionist "hegemonism" seeking to impose its system of government on different parts of the world. Many Chinese question the disintegration of contemporary, liberal Western societies caused by the imbalance and contradictions between individual human rights and the existential interests of the wider community. Individual rights as advocated in the West lead to the break-up of traditional family structures and the family unit, to increasing divorce rates and single-parent families, to the growing alienation of youth, with new behavior patterns of drugs, sex, and marital experimentation. In this view, the values of Western societies are undermining and destroying the values and stability of traditional societies like China's own. ALMOST 30 years ago, China's leaders began to proclaim their view of the contemporary world and their relationship with it in economic terms. The establishment of diplomatic relations with Israel in January 1992 was a direct result of this changing view and of China's own national goals and priorities. Only in these terms can China's Middle East policy be understood. China urges peaceful and preferably bilateral negotiations of disputes, emphasizing the need for compromises and concessions. Today's China opposes extremism, ideological fanaticism and terrorism, which can only spawn deeper conflict, frustrate practical and pragmatic problem-solving and damage the global economy. Westerners - Israelis among them - who criticize China as an enemy of the West show little understanding of China's basic policy goals and interests. Uninformed and undocumented China-bashing makes no contribution to international dialogue and understanding, not in our own Middle East nor in China's own regional environment. As a major importer of oil, China's concern in our region is, like that of its Japanese neighbors, for the stability and quiet essential to ensure peaceful oil production and export. China's trade with Israel is not of major significance for either country, totalling less than $3 billion per annum. China has long been interested in Israeli technology - military, agricultural, industrial and communications. Israeli exporters and manufacturers tend to concentrate their energies in areas of the world with which they are historically familiar. They may not have the resources, or the resourcefulness, to persevere in a Chinese environment requiring a long and patient learning process. Israel's backtracking on military deals and contractual commitments to China in recent years has not endeared Jerusalem to Beijing. It has, in fact, completely dulled the early sparkle that characterized the first years following the establishment of relations. It reflects as much the irresponsibility of failing to get the green light from our US "boss" before obligating ourselves to very considerable military sales and contractual commitments to a major power as it does - in Chinese eyes - demonstrate Jerusalem's subservience to Washington. What followed was breach of contract on a scale highly unusual in international commercial and military relations. However, the Chinese of the post-Mao era are pragmatists. They draw their conclusions from this kind of experience and learn their lessons for the future, but continue to conduct bilateral relations in the light of mutual interests and benefits. In China's view, these interests are best served in the Middle East by genuine efforts to achieve an Israeli-Palestinian peace settlement, thereby removing or lessening local threats to the stability in a region currently supplying up to two-thirds of China's vital oil imports. The writer is a former Israeli ambassador to China.