CHINA's tremendous potential in the world market, combined with the approach of 1997, has made Mandarin a popular language among Hong Kong people and foreigners, said Professor Han Jia-ao, consultant to the K. K. Leung Hanyu Institute of the School of Continuing Education, Baptist College. Professor Han, who is alo associate professor in Chinese Language of Tsinghua University in Beijing, was speaking at a recent advisory committee meeting of the institute. ''The mission of the Hanyu Institute is to promote Chinese culture through Hanyu studies,'' Professor Han said. Set up in October last year, the institute provides courses for Putonghua learners as well as teachers. This spring, 524 people, including 88 foreigners, attended the institute's 23 Putonghua classes. A wide range of courses is offered. These include business and vocational Putonghua; training for Putonghua teachers; a tutorial course in ''Chinese proficiency tests''; speaking and listening skills; writing simplified Chinese characters, and Chinese calligraphy. Describing the courses, Professor Ding Xia, consultant to the institute and associate professor in Chinese Language at Tsinghua University said much attention was being given to the differences between Cantonese and Putonghua. ''The differences in articulation of consonants and vowels, use of grammar, vocabulary and idiom will be explained to the students in detail,'' Professor Ding said. He pointed out that Hong Kong has played an active role in language transformation in the past 10 years. ''Chinese words of Hong Kong origin for ''consensus'', ''level'', ''joint'', ''creativity'' and ''three-tier system'' are freely used in Putonghua. ''Condensed lexical items are widely used in newspapers and magazines in Hong Kong, and this is the trend in modern Hanyu development,'' Professor Ding added. By collaborating with the David Lam Centre for International Communication of the Simon Fraser University in Canada and setting up an overseas branch there, the institute has taken a first step in its mission to foster the wider use of Hanyu.