WHAT is the future of Chinese film? Is it progressing toward new freedom, or moving back to the suppression of fresh ideas?Nobody seems to know for certain. On the optimistic side, one of the most visually striking works at this year's Cannes Film Festival was "Life on a String," written and directed by Chen Kaige, who ranks with China's most respected young filmmakers. His high visibility at the most important European filmfest indicated that Chinese cinema is still able - and willing - to make an impressive showing on the international circuit. On the pessimistic side, however, government control of Chinese film is in the ascendancy. Only a few months have passed, for instance, since China tried to withdraw its own entry, "Ju Dou," from the Academy Awards race - apparently because this brilliantly made story of family conflict presented a downbeat view of provincial Chinese life. While that movie is reportedly banned in China to this day, its director, Zhang Yimou, has completed another film called "Raise the Red Lantern," and other young Chinese directors are also continuing to work in the hope that attitudes of censorship will ease. But reports indicate that real improvement has yet to begin. "Recent months have seen a series of increasingly absurd and tunnel-visioned decisions" from the Chinese government ministry in charge of cinema, notes Tony Rayns in Sight and Sound, the B ritish film magazine. So caution has become a watchword in the Chinese film community - even among the usually bold members of the "Fifth Generation" group, composed of the first filmmakers to graduate from the Beijing Film Academy after the Cultural Revolution period. In such a climate, one way to express new and provocative ideas is to tell allegorical stories set in the past. Mr. Chen's "Life on a String" is such a tale, commenting on the present dreams and needs of China's people through the symbolic story of an elderly b lind musician, his devoted young apprentice, and their conviction that his sight will be restored when his lifelong dedication to art has caused 1,000 strings to break on the instrument he plays. "The most serious problem in China today is a cultural problem," Chen told me during the Cannes festival. "It's the problem of what to believe in. That's what this story is about: What dreams should we have?" The old musician in the film, Chen continues, "has a belief that's like a religion to him. He doesn't question it. But the boy who serves him represents a new generation, a new kind of person who looks for strength inside himself." Beliefs may be necessary for people of all ages, Chen says, but hope for China's social progress and its future must come from the younger generation's more open attitudes. Many of Chen's own attitudes reflect the negative impact of the Cultural Revolution on Chinese life - a force that hit him personally at age 14 when Mao Zedong's edicts resulted in his being ousted from school and sent to the countryside to work as a farmer, factory worker, and soldier. "Before the Cultural Revolution," he says, "China was stable with its beliefs in Mao and communism. After this time, China lost its identity. My generation had been in the countryside, and like young people in Europe afte r World War II, they started to question their culture. The belief system had been broken, and they needed something new to believe in." Chen does not believe his generation has succeeded in replacing the old belief system with a new and vital way of thinking. China today is beset by a "state of spiritual void," he says in a written statement commenting on his latest film, and the Chinese people are "disillusioned by reality and the decay of a once glorious civilization." Yet he sees hope in the Chinese men and women now coming to maturity. "They want to do something," he says, "to change the culture and the base that we stand on." Their job won't be easy, Chen says, partly because they've been Westernized to a degree and know little about traditional Chinese culture and society. Film can be a useful tool for change, but Chen acknowledges that using it effectively can be difficult, given present-day realities of bureaucracy and censorship. The screenplay of "Life on a String" was submitted for government approval in 1988, he says, when the situation was less rigid than today. "If it were sent ... now," he muses, "things would be different!" Although the film was shot in China, no Chinese funding was involved - financing from Germany, the United Kingdom, and Japan supported the production - and Chen was careful to keep a low profile while the picture was being made to avoid drawing unnecessary attention. The movie was successfully completed, and was received respectfully in the main competition at Cannes, earning praise for its stunning imagery that helped offset criticism for its slow-moving story and lack of a firmly constructed ending. Chen seems pleased with the outcome of his efforts - yet as he looks ahead to his next project, he displays the caution and uncertainty that have become characteristic of Chinese filmmakers. While he has two projects on the drawing board, one about a Chinese woman in New York and another about two Peking Opera singers, he isn't sure whether he will be able to launch either of them in the near future. Whatever his next move proves to be, however, his forward-looking attitude confirms that he will keep pressing for cinematic growth and maturity. "Having eyes and looking at what's in front of you doesn't necessarily mean seeing," he says, referring not only to the young apprentice in "Life on a String" but to the currently unsettled and direction-seeking Chinese culture that this character represents.