The deepening crisis between the US and China over spy allegations reverberated throughout the Asia Pacific region yesterday, with analysts predicting that it will affect US strategic policy towards China, and American military ties with Japan, South Korea and the Philippines.
The setback in Sino-US relations could also push China to wards closer ties with North Korea and Russia to counter American world dominance, observers said. This would in turn influence current moves by Washington to break the diplomatic impasse with North Korea.
Still furious over the NATO bombing of its embassy in Belgrade on May 7th, China poured scorn yesterday on the allegations that it stole nuclear secrets from the US, labelling them "outrageous and sensationalist". The official People's Daily accused the US of making up stories from the Arabian Nights "to paint China as an evil demon" and said the congressional report by Mr Christopher Cox that China gave money to the Democratic campaign in 1996 to gain influence "makes one laugh his head off".
However, the prospect that China could develop nuclear weaponry to match the most modern in the US arsenal has spread alarm among US allies, especially Japan. "The report must have deeply shocked the Americans and it will certainly have a grave impact on US policy toward China and on Japan-US security ties," said Mr Hideshi Takesada, of the National Institute for Defence Studies in Tokyo.
He predicted President Clinton would switch from a policy of "strategic partnership" with China to one with a marked "containment flavour". The US and Japan recently have strengthened their military alliance and discussed developing a joint missile defence system which would also include South Korea and possibly Taiwan, a development which would infuriate Beijing.
On Monday Japan's parliament enacted legislation to widen logistical support for US forces and expand Tokyo's military role in the event of an Asian crisis, a move which the Chinese government strongly criticised. China may take a regional initiative at a meeting in Beijing on June 3rd to 5th with the highest-level North Korean delegation in eight years.
The second-ranking leader of the Democratic People's Republic of Korea, Mr Kim Yong-nam, will be in Beijing at the same time as the Russian Foreign Minister, Mr Igor Ivanov, raising the prospect of a three-way meeting on closer ties in the north-east Pacific.
The US presidential envoy, Mr William Perry, is currently engaged in discussions in Pyongyang with North Korean leaders.
Both the US and China have a vested interest in keeping stability on the Korean peninsula but the crisis in US-China relations makes the interaction between Beijing and Pyongyang less predictable, according to a senior western diplomat. Beijing and Moscow have also moved towards a strategic partnership since the NATO strikes on Yugoslavia began.
"Russia and China are playing up their partnership as part of an orchestrated anti-US alliance," a Russian diplomat said.
However, the idea was based on temporary political convenience, according to Mr Oleg Arin of the Russian Academy of Military Science, who said: "They talk about strategic partnership, but that is just talk."
The new tensions in the Asia Pacific region could exacerbate a crisis in relations between China and the Philippines over a disputed area of the South China Sea. China has accused the Philippine navy of ramming and sinking one of its fishing boats near a disputed rock, called Scarborough Shoal, at the weekend and violating Chinese sovereignty.
Manila yesterday insisted it was an accident, and Philippine government officials were quoted as saying the incident reinforced Manila's need for US protection.