CHINA has insisted that the Prince of Wales Building barracks site, including an adjacent piece of land, be handed over to the People's Liberation Army (PLA) stationed in Hong Kong after 1997, it was learned yesterday. Sources said Beijing would not agree to the western part of the HMS Tamar naval site being redeveloped because there was a ''practical need'' for the PLA to keep the piece of land adjacent to the building, which will house the PLA headquarters. The adjacent site was one of the sticking points at the two-day meeting of Sino-British Joint Liaison Group (JLG) defence experts, which ended yesterday without agreement. The sources said the two sides were trying to resolve outstanding issues in the handover of military sites before the JLG full session scheduled to be held in about 10 days in Beijing. ''We've made good progress for this round of talks but we have not yet reached a general agreement,'' British team leader Alan Paul said. ''Our objective is to secure the release of as many sites as possible for Hong Kong's social and economic development, while catering for the requirements of the future Chinese garrison,'' he said. A mainland official maintained that the demands for military sites were not excessive. China was asking for ''substantially less'' than what existed at present. ''We have not asked for too many things. We adopted a reasonable attitude over the handover of military facilities,'' he said. The source said there would not be a large PLA base at Chek Lap Kok airport. He said the Chinese side wanted to have facilities for the PLA air force similar to that for the Royal Air Force at Kai Tak. The RAF has an office at Kai Tak. It is understood that the Chinese side also demanded pier facilities for the PLA navy on the Central and Wan Chai reclamation site. The source said Beijing wanted the United Services Recreation Club in Gascoigne Road to be handed back to the Special Administrative Region (SAR) because it was ''part of the Gun Club Hill Barracks''. In a related development, the Mirror Monthly said the size of PLA deployment in the SAR should be ''around 7,000''. It said although one division of soldiers would be sent to the SAR, the size of the division would be less than the 10,000 a division generally comprised. The report said the PLA was unlikely to recruit civilian staff here. The army would handle its own logistical matters, including supplies, transport and medical facilities. It said the PLA would also strictly limit the number of family members of its officers to be settled in the SAR.