United States Treasury Secretary Robert Rubin warned yesterday that tension in the Taiwan Strait could jeopardise China's Most Favoured Nation (MFN) status. Mr Rubin, speaking at a Hong Kong American Chamber of Commerce meeting, is the most senior US official so far to speak about possible damage to Sino-American relations resulting from China's large-scale military exercises off Taiwan. 'The Clinton administration has said it will support MFN status for China. Clearly it is going to be a difficult issue in Congress,' he said. 'Our relationship with China is subject to a range of unresolved issues of great seriousness.' Taiwan apart, human rights and copyright protection are also an on-going source of irritation between the countries. In Beijing, Foreign Ministry spokesman Shen Guofang said MFN was mutually beneficial to both countries and should be renewed on a routine basis. But he emphasised that China would not compromise its sovereignty to retain MFN. Mr Rubin stressed the Clinton administration's commitment was to engagement rather than isolation, particularly in the economic and political life of the Asia-Pacific region. But while stressing the positive aspects of Sino-US ties, Mr Rubin said China's military exercises were causing intense pressure. 'The United States is working to achieve its policy goals with China through a long-term strategy of engagement,' he said. 'Engagement is not a favour to Beijing, but a policy that advances China's interests, our interests and the interests of the region. 'Comprehensive engagement will not solve our problems overnight. No approach will do that. But we believe it is the best way to achieve progress over time, and that progress is essential. 'We recognise that being unsuccessful here will require time. But we are here for the long term, and are committed to working with others for what is in our mutual interests.' Hong Kong government officials warn that the withdrawal of MFN could cost the territory about $234 billion in lost trade and about 90,000 jobs. Top-level delegations of government officials and business leaders are expected to maintain vigorous lobbying of Washington trade officials and political leaders during the countdown to the June deadline. Mr Rubin was in Hong Kong after an Asia Pacific Economic Co-operation meeting in Japan. He met the Governor, Chris Patten, for talks on Monday.