Deng Xiaoping, China's short, square-shouldered, tart-tongued leader, has withdrawn from the ''first line'' of day-to-day decisionmaking, according to Vice-Premier Wan Li. But he remains in excellent health and actively participates in the formulation of major policy issues.
Mr. Wan made these comments to a visiting Reuters executive. Chinese officials now vigorously deny the remarks imply any change in Mr. Deng's actual status. He remains vice-chairman of the Chinese Communist Party, chairman of the party's Military Commission, and chairman of the Chinese People's Political Consultative Conference.
Mr. Deng gave an important unpublished speech two weeks ago on the streamlining of China's creaky, unwieldy bureaucracy and is currently said to be working on the country's next five-year plan.
Mr. Deng is ''still the most authoritative and respected leader in our ranks, '' Reuters quoted Mr. Wan as saying. ''Because he is aged 77, we are greatly concerned about him and only seek suggestions from him on major issues,'' Wan added.
Behind these remarks is believed to lie a longstanding and carefully planned effort by Mr. Deng to institutionalize the transfer of power in what has been a highly authoritarian, highly centralized party and government structure.
The question now is whether Deng can gradually transfer his authority, which rests as much on his forceful personality and unrivaled political experience as on any formal positions he holds, to his chosen leaders, so that when he retires from all his positions no great upheavals will rock China. He has told some visitors that he plans to retire by 1985.
Success in this final undertaking could well be considered his greatest contribution to the People's Republic.
More immediately, Deng is trying to rid China's government of encrusted layers of inefficiency and corruption and to turn it into a well-oiled, smooth-running machine capable of propelling a billion people, four-fifths of whom are peasants, into the computer age.
(In a proposed plan to trim the top-heavy leadership, China will slash the number of its vice-premiers to two or three from more than a dozen now in office , reports the usually well-informed left-wing Hong Kong newspaper, Ta Kung Pao.)
Mr. Deng was last seen in public Jan. 12 at a work conference of the Army's General Political Department, where he seemed animated. According to what Mr. Wan told Reuters, Mr. Deng has since been visiting the south.
(According to UPI, a Chinese news report said Feb. 7 that Mr. Deng was in Canton working on a party purge. The South China Morning Post said Deng had arrived in Canton, capital of southern coastal Guangdong Province, where smuggling and corruption is believed to be the worst. The Post said Deng was accompanied by a large retinue of military, party, and government officials.)
Rumors about Mr. Deng's health and whereabouts have arisen because he is the only top leader who was not mentioned in the news media during the recent Lunar New Year period.
Mr. Deng retired from the vice-premiership in August 1980 and no longer holds any government post. According to Mr. Wan, he was offered the party chairmanship but turned it down. He could certainly have the position of chairman of the republic (chief of state) if a revision of the Constitution this year revives this post, but he will probably turn this down as well.
Instead, he appointed Hu Yaobang party chairman, Zhao Ziyang premier, and Wan Li first deputy premier. All are experienced, reform-minded administrators and associates of Mr. Deng.
Overseeing and advising this frontline leadership are Mr. Deng himself and other senior leaders like Ye Jianying, Chen Yun, and Li Xiannian. All are vice-chairmen of the party, and Marshal Ye is also chairman of the National People's Congress, China's legislature.
The position of one other vice-chairman, Hua Guofeng, is somewhat different. Appointed party chairman after Mao's death in 1976, he is said to have resisted Deng's policies of economic and political reform, sometimes with Marshal Ye's support. He was finally forced to step down from the party chairmanship last July. Marhsal Ye was among those who voted for his successor, Mr. Hu.
Mr. Deng's remaining concern must be trends within the People's Liberation Army (PLA), China's armed forces. Resistance to Deng's policies of downgrading Mao Tse-tung's legacy, reviving economic incentives, and purging the government of the elderly, incompetent, and corrupt, is said to be strongest within the PLA.
The PLA is a hierarchical organization which reveres its military heroes. This is why Marshal Ye, despite his frail health and rumors about corrupt, high-living relatives, still enjoys such prestige among the armed forces.
None of the frontline leaders installed by Mr. Deng have comparable prestige. This is probably why Mr. Deng himself took over the chairmanship of the party's Military Commission when Mr. Hu succeeded Mr. Hua as party chairman.
Mr. Deng was never a frontline military commander, but served for many years as a political commissar in the PLA. In the final, climactic phase of the Communists' war with the Kuomintang, Mr. Deng achieved military fame as political commissar and co-leader of what came to be known as the Liu-Deng army, led by Marshal Liu Bocheng.
Thus, although Mr. Deng may have retired from the front line, he still controls the armed forces and retains a powerful voice in both party and government.