US Secretary of State Condoleezza Rice warned yesterday that European Union plans to lift an embargo on arms sales to China might alter the military balance in Asia, where the United States stations armed forces.

Washington has long opposed the plan to lift the arms ban, but Rice?s comments come one week after China passed an anti-secession law that allows for the use of military force against Taiwan, heightening US fears it could be embroiled in a potential conflict. ?From the US point of view...it would not be the right signal. It might serve to alter the balance in a place the United States in particular has security interests,? Rice said in the Chinese capital on the last stop of a six-nation tour of Asia.

Rice?s remarks intensified a campaign she has been pressing in Asia to stop the EU going ahead with its plan. Luxembourg, which hold the EU?s rotating presidency, has pledged to reach agreement on arms sales by the end of June.

?As for the anti-secession legislation, I said to my Chinese hosts that we would hope that this would be be something that, after having made dialogue across the Straits more difficult, that they would take steps to reduce tensions now with Taiwan,? Rice said. ?The United States is not pleased when either side tries to change the status quo,? she said, adding China should makes moves to ?show goodwill? in its relations with Taiwan.

Chinese Foreign Minister Li Zhaoxing called Taiwan ?the biggest challenge in Sino-US relations?, the official Xinhua news agency reported. Chinese leaders also reiterated their position that the anti-secession law was aimed not at war but at peaceful reunification with Taiwan.

<B>Lindsay BECK</B>