This picturesque and traditionally insular Pacific city, suddenly the destination of many wealthy Asian immigrants, has become a test case of whether Canada can attain its dream of being a broadly tolerant and ethnically diverse country.

Lately, city leaders acknowledge, Vancouver has not been passing the test.

Alarmed by a recent and highly visible influx of wealthy Hong Kong immigrants who are buying up huge swatches of Vancouver`s downtown and settling in the city`s toniest neighborhoods, some residents have begun agitating for harsh new restrictions on foreign investment and immigration.

In a city where every third resident is now foreign-born, prominent politicians-a former Vancouver mayor and a former British Columbia Supreme Court justice among them-are unabashedly warning that Canadians of European stock could soon become ''a new minority'' in Canada.

A brochure put out by a group called the British/European Immigration Aid Foundation cautions that Canada is being overrun by ''peoples often very or totally different in backgrounds and lifestyles.''

Casual conversations among the city`s white business elite are turning

''alarmingly prejudiced,'' according to Philip Barter, a senior partner at Price Waterhouse and a leading analyst on Asian investment.

And Chinese-Canadians whose families have lived in Vancouver for generations report growing unease about a potential anti-Asian backlash in a province that once was notorious for racial discrimination.

''Once again, we are being reminded that we don`t belong here,'' said attorney Bill Yee, who emigrated from Hong Kong 30 years ago and served on the Vancouver City Council from 1982 to 1986 as the city`s first Chinese-Canadian alderman. ''We have been fighting this bloody thing for years.''

For the last decade Vancouver has aggressively courted foreign investment, Asian investment in particular.

The tensions building in Vancouver are surfacing in other major Canadian cities as well, as decades of federal efforts to encourage multiracial tolerance run smack into the long-held prejudices of some Canadian citizens.

About 10 percent of Canada`s 26 million people report non-European ethnic origins, according to the latest census figures (racial statistics are not collected).

In Vancouver, Chinese-Canadians now account for 8 percent of the metropolitan area`s population of 1.4 million people. Traditionally they have kept a low profile, although many have lived in the area for generations and some trace their lineage to the Chinese peasants who helped build the Canadian Pacific Railway a century ago.

The Chinese well remember that their forebears were forced to pay a crushing ''head tax'' until the 1920s, were barred outright from entering Canada from 1923 until 1947, were denied the right to vote until 1947 and were subject to less overt forms of official discrimination until 1967.

Suddenly, though, the tables have turned. Many of the newly arriving Chinese, most noticeably those staking out a safe Canadian haven before Hong Kong is transferred to the People`s Republic of China in 1997, are wielding unprecedented financial clout.

As a result, all the region`s Asians have suddenly been thrust into the spotlight.

''Many people in Vancouver still assume that if they see someone with an Asian face, that person must be a laborer,'' said University of British Columbia professor Edgar Wickberg, an expert on the history of Chinese in Canada.

''There is always some resentment at people who are coming in at some place other than the bottom of the economic ladder, and that resentment is spilling over to anyone with an Asian appearance.''

No one knows exactly how many of the 22,000 Hong Kong Chinese who immigrated to Canada in 1988 settled in British Columbia, how many of them were millionaires or how much property they have bought. Those unknowns have contributed greatly to the unease over the extent of foreign ownership.

Provincial records indicate that between January, 1987, and October, 1988, 1,168 foreign entrepreneurs with a total net worth of $1.1 billion settled in British Columbia. About 60 percent of them were Asian, and the Hong Kong investors among them are estimated to be buying $400 million worth of provincial real estate annually.

The most prodigious Hong Kong investor has been secretive billionaire Li Ka-shing, who last year bought one-sixth of downtown Vancouver in a single transaction by purchasing the 203-acre site of the 1986 World`s Fair for $260 million.

A huge commercial and residential complex is planned for the site, and some local politicians question the wisdom of allowing such a major portion of downtown to fall under foreign control.

Fears were not calmed when Li`s son, Victor, a Canadian citizen, pre-sold a nearby 216-unit condominium development to Hong Kong buyers in three hours without advertising it in Vancouver. The ensuing local uproar led Victor Li to apologize and promise, ''It won`t happen again.''

Out of all proportion to their numbers, the Hong Kong immigrants now are being blamed for skyrocketing housing prices, rising property taxes and a cash crisis in the public schools, which are newly compelled to devote major resources to teaching English to immigrant children.