The State Department says China has spurned a U.S. offer to pay about $35,000 for costs associated with the April 1 emergency landing of a U.S. Navy spy plane in China after its collision with a Chinese fighter jet. China has been seeking $1 million in U.S. compensation for the incident.

Officials here say the two sides are at an impasse over the compensation issue, but they do not expect the dispute to affect the overall U.S.-Chinese relationship which has been on the upswing since Secretary of State Colin Powell's Beijing visit late last month.

China surprised administration officials in early July when it submitted a bill for about $1 million for the spy-plane affair.

It sought compensation for helping dismantle the plane for transport back to the United States, but also for housing and feeding the 24-member U.S. crew, and for allowing the damaged aircraft to make its emergency landing on Hainan island.

U.S. officials were taken aback by some of the charges, including the notion of paying for the 11-day detention of the crewmembers, who they said should have been released immediately.

Diplomats from the U.S. embassy in Beijing met Chinese officials Tuesday and submitted a check for just under $35,000 to settle the matter, which the Chinese side refused to accept.

State Department spokesman Phillip Reeker says the proposed payment represents the fair value of services China provided, and that the United States does not intend to negotiate further.

"We're only going to pay reasonable, tangible costs associated with the recovery of the aircraft and we believe that our calculation was a reasonable calculation," he said. "We presented the offer for reimbursement of costs of the recovery operation to the Chinese. It remains on the table. And it's up to the Chinese as to whether they choose to accept it."

Officials here privately minimized the importance of the compensation issue, and predicted the matter may end where it is now, with China refusing on principle to accept the U.S. payment.

They say both sides want to get beyond the spy-plane affair and make a success of President Bush's first visit to China, planned for October.

As a result of Secretary Powell's Beijing visit last month, the two sides agreed to resume a formal dialogue on human rights issues, to hold talks next week on U.S. concerns about China's weapons proliferation record, and to convene a commission that seeks to avoid incidents between the two militaries.