China's continuing move toward a market-oriented economy is generally seen as a boon for overseas companies as well as its own economy. It also will have some drawbacks.

Universal, free health care, in place since 1952, gradually is being supplanted by personal responsibility. Firms can no longer afford to maintain the umbrella of benefits they once gave to all workers; some hospitals no longer get all supplies gratis from the government.One result is likely to be a further cut in the amount of high-priced modern medical equipment imported, said China National Medical Equipment & Supplies Import & Export Corp.

The state firm is the only one licensed to import such items. Last year, it bought more than $300 million worth of medical instruments, but that was down

from around $700 million in 1993.

In recent times, the country has bought from Israel, Canada and Austria almost 3,000 sets of computerized tomography machines for diagnosing cancer and six gamma-ray machines for killing tumors.

The ministries of public health and finance are discouraging imports of more gamma-ray machines, which cost at least $2 million each.

As local governments and companies began cutting back the proportion of medical costs they covered for employees, big hospitals in Beijing and Shanghai and the provinces of Henan and Shandong set out to attract more patients with high-tech equipment.

"They failed to notice that many people cannot afford the high expense," said one official of the state firm.

Hospitals at county and village levels - which are about 85 percent of the country's total - "do not have the ability to buy such machines. Some cannot even get enough electricity for conventional machinery," the official said.

A number of American and other companies have tried to ensure their position by producing in China. General Electric Co. was the first to establish a joint venture producing medical systems.

Johnson & Johnson Co. of New Brunswick, N.J., opened a subsidiary last year, the first wholly owned firm set up by the company in China. It makes health care products for babies and women, and medical diagnostic apparatus.

Hewlett-Packard Co. of Palo Alto, Calif., and China Medical Equipment Industrial Corp. announced last year they will invest $15 million in a medical equipment joint venture.

It's not all the flashy stuff, either. Becton Dickinson Co. said last fall it will transfer technology by way of a joint venture in Jiangsu province producing disposable hypodermic needles, most of which are now imported.

China exports about $1.5 billion worth of medical equipment and says it will grant export credits to those countries purchasing China-made instruments. Some X-ray machines have been sold to Southeast Asian and African countries.