ALTER TABLE ALTRE COLUMN SET DATA TYPE doesn't work in this case, since you are trying to reduce the size of the VARCHAR column.
piet.t's solution may work under certain circumstances, when you could DROP COLUMN from the table. There are many cases in which you can NOT drop a column from a table. It is good to check IBM Doc to find out the detail and check whether it works in your case or not -> https://www.ibm.com/docs/en/db2-for-zos/12?topic=statements-alter-table
Also, step 2 needs to consider the length of existing value, some existing values may exceed 1600 characters, you need to decide how you want to truncate the values.
On the other hand, you should check your application or database physical design to see if you really need to reduce the size, for example, you can normally tolerate that in the application code or from the SQL statements.