AS rival Cambodians seek this week to settle their 12-year civil war, the United States and Western allies vie with China and Vietnam to shape the country's future peace.Officials of the Phnom Penh government and three resistance parties have gathered for a four-day meeting that could nudge negotiations close to an overall settlement, Western and Asian diplomats say. At issue is a United Nations' peace plan calling for the UN to administer Cambodia during a transition to peaceful self-government. The UN would monitor a cease-fire, disarmament of warring armies, and elections. Arriving for the meeting Sunday, Hun Sen, prime minister in Phnom Penh proposed partial demobilization of Cambodia's armies. Phnom Penh resists total demobilization, fearing a return to power of the extremist Khmer Rouge. Still, Cambodian peace talks have gained momentum, Asian diplomats say. During the last two months the Cambodians agreed to a cease-fire extension and to shift their interim council, headed by Prince Norodom Sihanouk, to Phnom Penh later this year. These advances follow warming ties between China and Vietnam, which have fought a proxy war since Vietnam invaded Cambodia in late 1978. Vietnam backs the Phnom Penh regime, headed by the reformist Prime Minister Hun Sen. China supports the radical Khmer Rouge. In recent months, China and Vietnam have moved closer amid mutual worries about the collapse of communism in Europe. Last week's failed coup in the Soviet Union and the demise of the Soviet Communist Party will intensify that process, Western diplomats predict. The Cambodian rapprochement has made the United States, Britain, and France, which sit with the Soviet Union and China on the UN Security Council, worry that China and Vietnam want to sidetrack elections and impose a Communist-dominated regime in Phnom Penh, headed by Prince Sihanouk. "The danger is very great in having this kind of deal between China and Vietnam through their prots," says a European diplomat. "We have to keep in mind what Cambodia will look like after a settlement." Arriving for the talks, US Assistant Secretary of State Richard Solomon rejected UN involvement inside Cambodia before an overall solution, which includes holding elections. Earlier, Sihanouk urged that UN observers be sent immediately to Cambodia to monitor the cease-fire. Western observers say the US can use its clout in the UN and also influence the international aid needed to rebuild Cambodia to sway China and Vietnam and ensure elections. Mr. Solomon said, "The United Nations should not commit its resources, prestige, and credibility in the absence of a comprehensive solution among the Cambodians."