IT'S far from clear that the nuclear equipment recently sold by China to Iran has much potential for weapons production. Trade ties between the two countries go back many years, and the technology involved may be best suited for small-scale, perhaps medical, applications.But the reports of a deal between China and Iran again raise concerns about transferring nuclear capability to a country whose politics suggest a military scheme may lurk just out of view. China protests that what it sold has only peaceful purposes. It denies any "dual use" for the equipment. The Western countries that allowed the shipment of nuclear gear to Iraq might have made the same argument. Saddam Hussein showed how shallow such assurances can be. Do the leaders in Tehran share Saddam's nuclear ambitions? President Hashemi Rafsanjani has at times called for the destruction of all nuclear weaponry, but he has also talked of arming his country with nonconventional weaponry. Iran's turbulent mix of pragmatism and radicalism leaves the question up in the air. Iran has cause for jitters, knowing that Iraq, its bitter enemy, was bent on developing a nuclear arsenal. And it points angrily at Israel's nukes. This broader question of nonconventional weaponry in an explosive region ought to be dealt with during the multilateral talks scheduled as part of the current Middle East peace process. More immediately, how should the nuclear hints and rumors engendered by the China-Iran deal be handled? Secretary of State Baker is seeking further assurances during his visit to China. But most important, the sales to Iran reinforce arguments for strengthening the international agencies that set and police standards for the transfer of nuclear technology. The International Atomic Energy Agency, for example, needs greater access to intelligence on such matters, stronger powers of investigation, and more money. Its work is made even more complex by the possibility that Soviet nuclear know-how may be dispersed. China may have done the world no great harm with its recent sale to Iran. But it set off, again, an alarm that needs to be heeded.