China seen saying U.S. naval ship was breaking law

BEIJING (Reuters) - China accused a U.S. naval ship of carrying out an illegal survey off southern Hainan island, a Hong Kong TV website reported on Tuesday, after the Pentagon said Chinese vessels had harassed the ship in international waters.

Global oil prices rose 3 percent on Monday and held above $47 a barrel on Tuesday, partly on fears of geopolitical tension between the world's top oil consumers.

But the confrontation was unlikely to do lasting damage to ties between two countries closely involved in trying to end the global financial crisis, a Chinese analyst in Beijing said.

A U.S.-based expert on Asia-Pacific security said the confrontation did not appear accidental, but rather was China sending a message to Washington that it wanted respect for its growing military presence in the region. [nPEK221936]

Washington urged China to observe international maritime rules after the Pentagon said five Chinese ships, including a naval vessel, harassed the U.S. Navy ship in international waters on Sunday.

The Chinese vessels "shadowed and aggressively manoeuvred in dangerously close proximity" to the USNS Impeccable, an unarmed ocean surveillance vessel, with one ship coming within 25 feet (7.6 metres), a U.S. Defence Department statement said.

The tropical resort island of Hainan is the site of a Chinese naval base that houses ballistic missile submarines, according to independent analysts.

An unnamed spokesman for the Chinese embassy in Washington denied the Chinese ships had violated maritime rules and said U.S. ships had been conducting illegal surveying, the website of Hong Kong-based Phoenix Television (news.ifeng.com) reported.

"The U.S. claim about operating in high seas is out of step with the facts," the report quoted the spokesman as saying. "The U.S. navy vessel concerned has been consistently conducting illegal surveying in China's exclusive economic zone," the station quoted the spokesman as saying.

Chinese authorities had "repeatedly used diplomatic channels to demand that the U.S. side cease unlawful activities in China's exclusive economic zone," the report added.

The Chinese Foreign Ministry was unavailable for comment.

U.S. defence officials said the incident followed days of increasingly aggressive Chinese conduct in the area, including fly-bys by Chinese maritime surveillance planes.

It comes just weeks after the two sides resumed military talks, postponed in November after a U.S. announcement of arms sales to Taiwan, a self-ruled island China claims as its own.

And it echoes a stand-off in 2001 between U.S. and Chinese military forces after a U.S. spy plane made an emergency landing on Hainan after a collision with a Chinese fighter jet. China released 24 crew after a U.S. apology.

NO MAJOR FALLOUT TO TIES-ANALYST

The row is unlikely to derail Sino-U.S. ties when both sides are tackling the global economic slump -- Foreign Minister Yang Jiechi flew to the United States on Monday for talks ahead of next month's G20 summit -- but it suggests Beijing will take a tougher stance as its naval ambitions grow, said analyst Shi Yinhong.

"The United States is present everywhere on the world's seas, but these kinds of incidents may grow as China's naval activities expand," added Shi, an expert on regional security at Renmin University in Beijing.

The Impeccable is one of five ocean surveillance ships that serve with the U.S. 7th Fleet, which is based in Yokosuka, Japan. The ships use low-frequency sound to search for undersea threats including submarines, a U.S. military official said.

A U.S. Defence Department spokesman said the Chinese vessels had surrounded the Impeccable, waving Chinese flags and telling the U.S. ship to leave. The Pentagon also described accounts of half a dozen other incidents dating back to March 4.

Oil prices rose on news of the jostling on Monday and stayed high on Tuesday, although analysts said it was hard to see how the tension could threaten oil supplies or inflate prices.

"I can see the geopolitical risk between two producing countries. But the U.S. and China are two major consumers. I don't know why oil prices would rise on that," said Tony Nunan, risk management manager at Tokyo-based Mitsubishi Corp.

The confrontation coincides with two sensitive anniversaries in Tibet, making China especially sensitive to outside scrutiny of its affairs.

Analyst Shi said the seas off Hainan were important to China's projection of its influence with a modern naval fleet.

"The change is in China's attitude. This reflects the hardening line in Chinese foreign policy and the importance we attach to the strategic value of the South China Sea."

Denny Roy, an expert on Asia-Pacific security at the East-West Centre in Honolulu, Hawaii, said the confrontation appeared intended to send a message to Washington.

"I don't think this happened spontaneously," he said. "...No doubt it had the endorsement of central leaders in Beijing."

A recent study of China's rising power by a top People's Liberation Army thinktank said the country should seek to avoid confrontation with Washington but not shrink when pressed.

(Additional reporting by Ian Ransom in Beijing and David Morgan in Washington; Editing by Nick Macfie and Dean Yates)