One of China's largest petrochemical plants says it is negotiating with an American company to jointly produce polyurethane resin, a raw material used to make plastics.

Qilu Petrochemical Corp., in coastal Shandong province, is seeking a variety of overseas contacts in hopes of improving its output and exports, Long Shouxin, company director, said Monday.The polyurethane project would involve investment of more than US$60 million and make Qilu Petrochemical the country's largest producer of the material, he told the Business Weekly newspaper. Mr. Long did not identify the U.S. company.

Talks are also going on with another U.S. producer about a plastics processing plant involving "millions of dollars" in investment, Mr. Long said, and with an unidentified Japanese firm to buy a patent to produce polystyrene.

The last project, which the paper quoted sources as saying should be finalized late this year, aims to produce 40,000 metric tons of polystyrene a year for domestic use. China currently imports about 50,000 tons of polystyrene a year.

Another corporation official, Chen Chaoren, said the company plans to spend 80 million yuan (US$17 million) on equipment to produce 10,000 tons a year of an additive that improves plastic transparency.

As part of a general upgrading of operations, the corporation is building two power generators with equipment imported from the United States, Mr. Chen said. They will be used for the second stage of an ethylene project with capacity of 300,000 tons.

Qilu Petrochemical says it has annual capacity to process 8 million tons of crude oil. Output includes 600,000 tons of urea, 800,000 tons of synthetic rubber, 390,000 tons of organic chemicals and 200,000 tons of caustic soda.

Officials acknowledge that the ethylene project has cast a heavy financial burden on the corporation, involving US$2 billion in overseas loans and interest payments.

Some of its output is also not selling as well as previously, despite a general shortage in China of many petrochemicals. The corporation says it has 17,000 tons of polyethylene in stock, for example.

This apparent paradox is probably explained by the national austerity policy. Squeezing the economy has reined in inflation, but has also crippled many companies' ability to buy raw materials.

To overcome this, Qilu Petrochemical says it will concentrate on boosting exports to US$40 million this year from US$30 million in 1989.

The corporation now exports primarily butadiene styrene rubber, butanol, octanol and polyvinyl chloride. Its main customers are Japan, the Philippines, Korea, Singapore, Thailand and, it says, Taiwan. So far this year, the corporation has signed contracts to sell 5,000 tons of low-pressure polyethylene to Hong Kong, Singapore and the Philippines, officials say.

Separately, the official Chinese news agency Xinhua announced that production has begun at an ethylene plant in Jiangsu province after five years of construction.

The project, estimated to have cost US$1.4 billion, has annual capacity of 300,000 tons of ethylene and a variety of other chemical raw materials and finished products now generally imported, the report said.