WASHINGTON (Reuters) - When Hillary Clinton made her first trip abroad as secretary of state, she baldly said the United States could not let human rights disputes get in the way of working with China on global challenges.
Now that the blind Chinese dissident Chen Guangcheng is under U.S. protection in Beijing, according to a U.S.-based rights group, the United States will find out if China has made the same calculation.
Chen's escape after 19 months of house arrest and apparent request for U.S. protection comes at a vexing time for both countries, with diplomats preparing for annual economic and security talks in Beijing this week, and with China's Communist Party trying to contain a divisive political scandal involving a former senior official, Bo Xilai.
Assuming it has Chen, it is inconceivable that the United States would turn him over to the Chinese authorities against his wishes, said current and former U.S. officials.
That leaves China with a choice - let the broader relationship suffer in a standoff with the United States, or seek a compromise, a scenario analysts, current and former officials saw as probable though by no means certain.
"I can't imagine they will tank the relationship," said a senior Obama administration official who spoke on condition that he not be identified. "This isn't the same as a spy plane incident or Tiananmen Square. I do think they will try to manage it."
In 2001, relations between Beijing and Washington suffered a plunge after a collision between a Chinese fighter jet and U.S. surveillance plane.
The Tiananmen Square incident of 1989, when Chinese troops crushed pro-democracy protesters who had made the square their base, brought ties with Washington to an even deeper nadir.
As of Sunday, the United States has not publicly confirmed reports that Chen fled from house arrest in his village home in Shandong province into the U.S. embassy. China has also declined direct comment on the dissident's reported escape from his carefully watched home.
But Texas-based ChinaAid said it "learned from a source close to the Chen Guangcheng situation that Chen is under U.S. protection and high level talks are currently under way between U.S. and Chinese officials regarding Chen's status."
The incident will form an unwelcome backdrop for the visit of the U.S. secretaries of state and treasury to Beijing for their Strategic and Economic Dialogue on Thursday and Friday.
The reports of Chen's escape also come nearly three months after a Chinese official Wang Lijun fled into the U.S. consulate in Chengdu for over 24 hours, unleashing the Bo Xilai scandal that has rattled the ruling Communist Party months before a once-in-a-decade leadership handover.
U.S. economic analysts who follow China disagree about whether Chen's standoff could disrupt bilateral ties or cause new difficulties for the global economic recovery.
Bonnie Baha, a portfolio manager with DoubleLine Capital, said "the timing couldn't be worse" given Clinton's trip and with Beijing "already embarrassed over the Bo Xilai scandal."
"Given the state of the world's economy and the level of economic interdependence which currently exists, this certainly has the potential to roil world markets," she said.
But David Hale, a Chicago-based economist and veteran China watcher, said he saw "nothing new in this and (it) will continue so long as China remains an authoritarian country."
"I do not think this will have a major impact on the markets. The Obama administration will try to manage this in a low-key way," he said.
Chris Johnson, until earlier this month the CIA's top China analyst, said Sino-U.S. relations were "almost approaching a perfect storm," citing the Bo Xilai case, Chen's apparent escape and reports that the United States is considering selling Taiwan new F-16s in addition to upgrading its existing fleet.
"For the conspiracy-minded in Beijing, and there are plenty of them, they will see these things as completing the circle of a U.S. containment strategy designed to stifle China's rise," said Johnson, now a Center for Strategic and International Studies analyst.
How China's leadership will try to resolve the problem hinges on the balance between such nationalist sentiments and a more pragmatic desire to avoid further disruptions to the Chinese communist party leadership succession this autumn.
For now, the scale tips toward a quick, quiet resolution, said Shi Yinhong, a professor of international relations at Renmin University in Beijing who specializes in U.S.-China ties.
"China does not want to allow this case to have a lot of influence because it is not good for its foreign relations or its domestic politics," said Shi, adding that the countries have too much at stake to cancel this week's meetings.
"I don't think the United States will play this card to embarrass China. They still want to influence China on North Korea and Syria. They want to limit this case's impact because they know it is already embarrassing for China."
The U.S. and China have found ways to disentangle knotty problems in the past.
On April 1, 2001, a mid-air collision between a U.S. Navy EP-3 signals intelligence plane and a Chinese fighter about 70 miles off Hainan island killed a Chinese pilot and forced the U.S. aircraft to make an emergency landing on Hainan.
The 24 U.S. crew-members were detained until April 11, and released after a the United States wrote a letter saying that it was "very sorry" for the death of the Chinese pilot and that the EP-3 entered China's airspace the landed without clearance.
In February 2009, Clinton said that while the United States would keep pushing China Taiwan, Tibet and human rights "our pressing on those issues can't interfere with the global economic crisis, the global climate change crisis and the security crises."
Despite the suggestion that human rights might take a back seat, analysts said it was impossible - for reasons of principle and politics - for the United States to sacrifice Chen.
"It's inconceivable that they would hand him over against his will," said Tom Malinowski, who worked in U.S. President Bill Clinton's White House and is now Washington director for the Human Rights Watch advocacy group.
"Most people in the administration would recognize that that would be completely wrong," he said. "I don't think you even have to get to the politics of it - but if you do get to the politics of it, that is another argument against it."
Republican presidential candidate Mitt Romney has already accused Obama of being weak on China, an attack that would only intensify if the Democratic president were seen to abandon Chen.
Analysts and rights activists sketched out two possible scenarios for resolving Chen's case.
Under the first, Chen might be released inside China with guarantees about his own safety as well as that of his family and perhaps those who helped him to escape.
Under the second, he would go into exile despite what his associates describe as his reluctance to leave China.
"We would not force him out without being very, very confident that he would not suffer for his actions, and it's very hard to be confident about that if he remains in China," said Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution think tank in Washington.
"You never know what happens here, but the odds are sooner or later he will be escorted to the airport with assurances that he will be able to get on a plane and leave," he added. "He will not get back into China - probably never - certainly not anytime soon."
Additional reporting by Paul Eckert in Washington and Michael Martina in Beijing; Editing by Don Durfee and Jonathan Thatcher