OBSERVERS of the annual Most Favoured Nation trading status congressional bunfight will know that sticks with which to beat China come in various sizes and many colours. But above Tibet, prison labour, unfair trading, and political prisoners, one issue has emerged to capture the imagination of most people both in the State Department and Capitol Hill. Nowhere was the current mood better summed up than in a speech by Democrat Representative Edward Markey this week. ''To every major trouble spot in the world,'' he told the latest debate on the MFN issue, ''the Chinese have become the K-Mart of international nuclear commerce.'' Mr Markey's effort to push through a resolution reversing President Clinton's renewal of MFN failed, but the brilliance of his metaphor reflected a growing concern in Washington. China, he said, was supplying nuclear weapons components to Iraq, Iran, North Korea, Syria, Algeria and Pakistan. Ironically, the weapons issue had no place in the MFN debate - the President never linked renewal to arms sales - but the fact so many congressmen had cause to mention it was no coincidence. The China-and-arms theme emerged quietly earlier in the week, when a State Department official told The New York Times that the United States was getting so concerned about the apparent sale of M-11 missile technology to Pakistan that sanctions might well be threatened. No new evidence of the covert arms shipments was offered, and in a subsequent press briefing, State Department spokesman Mike McCurry refused to offer any, other than to hint that new intelligence had been gathered. ''We've monitored the issue of the possible trans-shipments of M-11s, that's something that we have analysed very closely, so that might suggest that we would have additional questions that we'd want to explore,'' he said. It seems likely that since initial reports of M-11 dealings surfaced a few months back, US agents have been hard at work in Pakistan - and possibly around the manufacturing centres in China - gathering more photographic evidence. The focus now shifts to Singapore, where in two days Secretary of State Warren Christopher takes the opportunity of attending the ASEAN conference to meet Chinese Foreign Minister Qian Qichen. At what is scheduled to be a 90-minute meeting over afternoon tea at the Westin Plaza Hotel, Mr Christopher has confirmed that the arms issue will be at the top of the agenda. He said it was necessary to ''see progress'' on the matter. Prison labour is another likely topic for discussion, with latest reports of former prisoners suggesting that even Christmas lights are being made in distinctly non-Christian jails. China's relationship with the Cambodian Khmer Rouge is also still of concern. But military matters will inevitably dominate. Not only is the M-11 issue heating to uncomfortable levels - suggested not least by China's reaction this week that the US should ''stop making an issue of it'' - but the PRC's involvement in other military matters, such as North Korea's dangerously maverick attitude to non-proliferation, will also be addressed. After Messrs Christopher and Qian talk politely about the sensitive issues, the real talking will be done over two long days in Beijing, when Lynn Davis, the Under Secretary for International Security Affairs, surrounded by US arms experts, will meet Chinese counterparts on the technical details of arms dealing and maintaining the region's military balance. After the onslaught of rhetoric from across the Pacific this week, Beijing may approach both sets of talks in guarded mood. But is it a foregone conclusion that it should be totally on the defensive? A report issued this week by Washington's Congressional Research Service (CRS) would make interesting reading, should Chinese diplomats choose to do so. Charting the shifts in conventional arms sales by the major powers (US, China, Russia and Western Europe) to the Third World (basically, everyone else), it indicates that when it comes to international weapons supply, the concept of good guy and bad guy is not a clear one. Since a peak in 1987, when China sold US$5.6 billion worth of arms to the Third World, and stood fifth in the league table of suppliers, it dropped dramatically to tenth last year, dealing in only US$100 million - less than one per cent of the total world trade. This is the same year in which arch-foe Taiwan, as the report startlingly shows, became for the first time the largest single buyer of conventional arms. Taipei's two large fighter aircraft orders from the US (F-16s) and France (Mirages) were the main reason why it spent US$10 billion in 1992, more than twice the amount spent by Saudi Arabia, a distant second in the table of arms-buyers. One reason for the drop in China's arms sales, the report's author Richard Grimmett explains, is that in the mid-1980s, it supplied a lot of hardware to both sides during the Iran-Iraq war. Since the Gulf War, Iran had preferred to purchase arms from Russia, while Iraq was subject to a United Nations embargo. In contrast, figures show there is but one undisputed king of international arms dealing - the United States. In 1992, it made US$13.6 billion in sales, taking nearly 57 per cent of the market. In 1991, it also came top with US$14 billion in sales and nearly 49 per cent of the market. In the past four years, it has signed deals for US$53.6 billion - nearly twice its closest rival, Russia, and far above China's US$4.2 billion. While China's sales have declined, America's have rocketed largely as a result of the end of the Cold War. While US arms makers used to rely on sales to the domestic military, the national defence run-down means they are now looking - and looking aggressively - abroad. China's concurrent fears over Taiwan's arms build-up were exacerbated, as Mr Grimmett acknowledges, by the fact that the US sale of the F-16s was a clear violation of the 1982 communique banning delivery of weapons of such quality to the island republic.Do these figures, as congressman Markey suggested, really make China a ''K-Mart'' for dubious arms-buyers? Mr Grimmett, the CRS's arms specialist in its Foreign Affairs and National Defence Division, still thinks that the figures hide a darker purpose. ''China's position on its willingness to abide by guidelines on missile transfers set out in the Missile Technology Control Regime is ambiguous at best,'' he writes. ''Given China's need to obtain hard currency, it seems prepared to pursue arms sales opportunities . . . wherever they present themselves.'' Talking later to the South China Morning Post, Mr Grimmett insisted that China's relatively small income from conventional arms was irrelevant. ''It's not a question of dollars, it's the capacity you have of selling certain categories of weapon. Some weapons do not cost a great deal, but can do a lot of political and strategic damage.'' The fact that Iran bought vast amounts of submarines and aircraft from its main supplier, Russia, might be less important than its ability to buy nuclear missile technology from countries like China, he said. M-11s were a complicated problem for the US to deal with, because it would not be impossible for Pakistan or any other end-user to modify them by adjusting the range and warhead payloads in order to skirt round international agreements. China had been advertising the M-11 on the arms market for some time, which had aroused American experts' fears. Mr Grimmett expected the missiles to be the focus of the Sino-US talks. ''But it [the M-11] is just one example of a general problem,'' he said. It is a general problem that neither Secretary of State Christopher, nor his junior officials, are likely to make much progress in ironing out with the Chinese this weekend. If in the long run, as Mr Christopher emphasised this week, President Clinton wishes to concentrate on ensuring the security of the ''New Pacific Community'', it will take a lot more goodwill from both sides.