Asia Watch is expected to release tomorrow a report condemning China's penal system and its brutal treatment of detainees. It is believed to contain damning evidence of human rights abuses and comes at a bad time for China as it courts US renewal of its Most Favoured Nation trade status. LAU Shan-ching was locked in a dark, lonely cell for a decade. Qi Dafeng has been left to cough his life away in a coal mine in Anhui province. Wang Miaogen cut off four of his own fingers in protest against Chinese persecution. Like the Buddhist nuns who braved Tibet's numbing temperatures this month to escape government torture, or the missionaries incarcerated then expelled last week, all can show scars from their experiences in the Chinese penal system. However, thousands more languish in Chinese prison cells, out of the headlines, isolated and overlooked. For these nameless victims, the terror starts with a knock on the door and never ends. Shackled and pushed into vans, they are dumped in cold concrete cells. The beatings begin immediately. Guards use truncheons, electric prods and bare fists. Deprived of food and relentlessly interrogated, they finally confess. Criminal charges are never needed, nor trials, nor sentences. Such is the fate that awaits thousands of inmates in China, where - despite more than a decade of impressive economic reform - the penal system remains a quagmire of misery and mistreatment for those sucked by a network of spies and informers into the draconian web of torture and tyranny. The inhumanity of China's gruesome gulag is painstakingly detailed, page after page, in an exhaustive report set for release this week by the influential human rights organisation, Asia Watch. Several hundred individual cases are documented in the 664-page report, Detained in China and Tibet. Asia Watch has refused to divulge details of the report before its expected release tomorrow. However, several well-placed sources have told the Sunday Morning Post it includes the largest, most comprehensive listing of political prisoners in China. The report's greatest impact will probably be felt in China's ongoing battle for unfettered approval of Most Favoured Nation (MFN) trade status with the United States. Asia Watch shows that conditions have not improved for political prisoners, a key component of MFN consideration. ''The Asia Watch report makes a strong and convincing point that despite all the adaption China has gone through to accommodate Western demands or pressures, the actual treatment and number of political prisoners hasn't shown any improvement,'' said Robert Barnett, director of the Tibet Information Network in London. ''This will maintain the pressure,'' said Sophia Woodman, executive editor of China Rights Forum, a publication of New York's Human Rights in China group. ''China responds to international pressure of this kind.'' Mr Barnett said the Tibet section names far more political prisoners than had previously been identified in the mountainous province that has been rocked by protests since the Chinese takeover in the 1950s. Ms Woodman said much of the information was already on record, but never in such a powerful context. Asia Watch's incisive look inside China's repressive penal system will unquestionably provide vital new ammunition to Beijing critics at a crucial early juncture in the annual negotiations over MFN. Therelease comes only weeks before top American officials travel to China to assess conditions and decide whether to recommend favourable action on MFN. The report also closely follows high-level negotiations last month involving the International Committee of the Red Cross (ICRC) in Beijing. The ICRC has been talking to China for at least a decade about visits designed to ensure prison treatment meets internationally-agreed standards of humanity and fairness. SOME believe the timing of the report may actually pose a snag in the negotiations with the Red Cross, described by a delegate in attendance as the most promising to date. There is some danger that the increased focus on the political prisoners might actually hinder humanitarian efforts by the ICRC. While most human rights groups push publicity campaigns as the best way of improving conditions and effecting the release of political prisoners, the Red Cross prefers to operate outside the political battlefield. ''The ICRC doesn't care about MFN,'' a Red Cross delegate said. ''We don't want to work for the US or against China. All we care about is the detainees and bringing them humanitarian support.'' Yet China's treatment of political prisoners remains a sensitive political issue and one greatly affected by international opinion. ''One only has to look at the history of releases,'' said Albert Ho, general secretary of the Hong Kong Alliance in Support of the Patriotic Democratic Movement of China. ''China releases prisoners when there is pressure or a particular date, like the decision on the Olympics or the MFN,'' he said. ''China cannot afford to ignore the pressure from the West.'' While opinions vary on the influence the report will have on MFN negotiations, the timing could hardly have been better planned. Some sources say the report was meant to be released last year, as a two-year update of the last Asia Watch report, which appeared two years after the Tiananmen Square crackdown in 1989. However, the delay is not believed to have been political. Sources say the research simply took longer than anticipated. In any case, the Asia Watch report will be circulated in the corridors of Washington within weeks of the release of a US State Department draft on human rights in China that blasts Beijing for ongoing abuses. Prison treatment is prominently featured in the 29-page China chapter of the Country Reports on Human Rights Practices for 1993, which was released to government agencies by the State Department on January 31. The document attacks Chinese authorities for ''widespread and well documented human rights abuses, including torture, forced confessions and arbitrary detentions''. The State Department report details accounts of torture, including ''the use of cattle prods and electrodes, prolonged periods of solitary confinement and incommunicado detention, beatings, shackles, and other forms of abuse against detained men and women''. Taken together, the two reports would seem to present a powerful case for rejection of, or conditional approval of MFN, which US President Bill Clinton has previously said would revolve around signs of significant improvement of human rights by the Chinese side. ''This will really put China on the defensive,'' said John Ackerly, director of the International Campaign for Tibet in Washington. ''One obvious effect is that it will shore up American insistence on human rights improvement. The most important condition of MFN now is human rights.'' Mr Ackerly added the report was well-timed for maximum impact as two high-ranking American officials prepared to visit China. John Shattuck, assistant secretary for human rights in the State Department, is expected to travel to Beijing within weeks, while Secretary of State Warren Christopher plans to meet Chinese officials next month. The first stage in approval of MFN is a positive report from Mr Christopher certifying that China has made acceptable improvements on human rights. Mr Ackerly believes the record shows such conditions have not been met. ''The report from Asia Watch has so many new names and faces,'' he said. ''Last year, the number of Tibetan political prisoners went up by 30 per cent.'' Mr Barnett, who worked closely with Asia Watch to produce the 1992 report, Political Prisoners in Tibet, said the new report refutes any perception that political unrest or official repression has been tamed in Tibet. ''There have been some well-publicised releases of prominent prisoners lately,'' he said. ''But the fact remains that the resistance and repression continue. Tibet constitutes only 0.2 per cent of the Chinese population, but about 25 per cent of all political prisoners.'' China recently released several well-known Tibetan prisoners, including Gendun Rinchen, a tour guide incarcerated for allegedly attempting to pass information on human rights abuse to visiting diplomats. His arrest galvanised anti-Chinese sentiment both in Tibet and abroad. China has an estimated prison population of over 1.2 million. Chinese officials reported that 120,000 prisoners were undergoing ''re-education through labour'' at the end of last year. Outside estimates of the prison population in China are much higher. While Chinese law provides for personal rights as wide-ranging as legal representation at trial, and freedom and privacy of correspondence, in practice, these rights are severely restricted. According to the US State Department, arbitrary arrest and detention without trial are commonplace. THE State Department reports that one million Chinese are detained every year for periods of several months. ''Persons appearing before a court are not presumed innocent,'' the report states. ''Despite official denials, trials are essentially sentencing hearings. Conviction rates average over 99 per cent.'' The report asserts that Chinese legal safeguards are typically disregarded and an inadequate system of representation is overwhelmed by political pressures. A vast number of detainees are held under articles 90-104 of China's Criminal Law, which defines ''crimes of counter-revolution'' as everything from espionage to disrupting traffic or talking to foreigners. Western human rights groups have for years speculated that the number of political prisoners swallowed up by China's gulag ran in the thousands rather than hundreds. Last December, they were startled by China's official acknowledgement of 3,172 counter-revolutionary criminals. Sentences for these prisoners can be severe. Tibet Information Network has been following the case of more than a dozen jailed Tibetan nuns who saw their sentences tripled simply for singing a Tibetan song. Robin Tassie, with the China Research Section of human rights organisation Amnesty International in London, said China executed more prisoners than the rest of the world put together: ''China had 63 per cent of the world's executions in 1992, and those are only the ones we are aware about.'' She added that Chinese officials announced more than 2,000 death sentences in 1993, compared to 1,891 death sentences the previous year. One China watcher noted: ''There is a grave concern that once dropped into this horrible legal system, you can never get out. Innocence is no defence.'' The importance of outside pressure cannot be emphasised enough by those who have first-hand experience with the cruelty of the Chinese penal system. ''The world must keep up the pressure and the publicity,'' said Mr Lau, a Hong Kong dissident who served 10 years in Chinese prison before his release in December 1991. Mr Lau, charged with counter-revolutionary activities, refused to sign a confession. ''China threatened to keep me locked away forever,'' said Mr Lau, who spent several years in solitary confinement. He said political prisoners have suffered in isolated surroundings ever since Beijing began sequestering these criminals of conscience in secret cells in the mid-1980s. ''The only reason they let me go was the publicity about my case in Hong Kong and the rest of the world,'' he said. ''The attention is important. It's the only chance innocent people like me have.''