WHEN Secretary of State James Baker III steps off his Air Force jet in Beijing tomorrow, he will be putting the Bush administration's controversial China policy to its most critical test.Preferring the carrot to the stick, Mr. Baker and President Bush have vigorously resisted efforts by Congress to isolate and punish China for its arms exports, human rights violations, and discriminatory trade practices toward the United States. "We can't make headway unless we discuss [these problems]," Mr. Baker told reporters in Madrid last week. "Ignoring them will not make the problems go away." But with little to show so far for a policy of restraint and engagement, Baker will be under pressure to secure something tangible from the hard-line leaders of the world's last major communist stronghold. "Bush has to be able to defend his policy. Therefore he cannot afford to have Baker come home empty-handed," says Chong-Pin Lin, associate director of China Studies at the American Enterprise Institute in Washington. "If Baker comes home with nothing, what does the administration do then?" asks Rep. Nancy Pelosi (D) of California. "Does he join us in conditioning MFN [most favored nation trade status]?" Congressional Democrats are spearheading an effort - opposed by the administration - to make the renewal of China's MFN trading status conditional on human rights and other reforms. Congressional sources say the Bush administration's China policy will be vindicated if Baker is able to convince the Chinese leaders to sign the Nuclear Non-Proliferation Treaty or agree to curtail sales of medium-range missiles. Another test of success will be Baker's ability to get assurance that leaders of China's pro-democracy movement who were imprisoned after the Tiananmen Square massacre of June 1989, are being humanely treated. "We have to have movement on human rights issues or else we will be what the Chinese said we were after Tiananmen: a paper tiger," Congresswoman Pelosi says. Baker, on the third leg of a three-nation Asian tour, is the highest-level US official to visit China since Tiananmen. His main challenge will be to gain concrete concessions, not mere verbal commitments like promises given to one high-level US emissary in 1988 that China would exercise more responsibility in selling arms abroad. In the most recent violations of that pledge China has sold medium-range missiles to Syria, Pakistan, and reportedly, Iran. Baker warned last summer that such sales would have "profound consequences," for US relations with China, but none have materialized. China experts say now may be a particularly difficult time to secure concessions from China's leaders, who have been thrown into a defensive mood by the collapse of communist regimes around the world. Convinced that Western nations are ganging up to force a peaceful transition away from communism, they view even small concessions as threatening to the regime. In this frame of mind, says Mr. Lin, "Bush is seen as being as hostile as China's liberal critics in Congress." But analysts also assume that Baker would not have agreed to make tomorrow's controversial trip, a trip that will redound to the advantage of the regime, without some prior assurances that concessions will be made. Besides arms and human rights issues, trade has been the main sticking point in US-China relations. Trade barriers and discriminatory practices have closed billions of dollars worth of US goods out of the Chinese market. The US deficit in China trade is its third largest after Japan and Taiwan. Chinese officials say the imbalance is illusory since the US counts products manufactured in Hong Kong, which is under a British leasehold until 1997, as part of the China trade. The US says China engages in deceptive trade practices, placing foreign labels on Chinese-made textiles to circumvent US quotas. In Beijing, Baker will remind his hosts that China's protectionist trade policy is under review and that the US will retaliate if changes are not made. He will also demand an end to the export to the US of goods made with Chinese prison labor.