While negotiations are gathering pace a week after the collision between a US surveillance plane and a Chinese fighter jet southeast of Hainan, neither side has yet explained precisely what their aircraft were doing in the area. And the deal being mooted to resolve the incident - involving mutually agreed statements and possibly a joint military commission to examine it - is likely to skirt over this and other sensitive issues in the interests of future relations. US intelligence sources have said that the US plane was observing Chinese trials of its Xia-class ballistic missile submarines, but there has been no formal explanation from the Pentagon other than that the mission was a 'routine signals security' flight - a military euphemism for listening to another country's military communications. And with Pentagon spokesmen still trying to insist its aircraft - which can even monitor mobile phones and fax machines - should not be called a 'spy plane', a wider explanation is not expected. China, for its part, has not explained why its fighters were so determined to shadow the EP-3E Aries II so closely - actions the US claims have been repeated many times previously in the area. Hainan's many missile bases and military sites boost Beijing's presence in the strategic South China Sea - a fact that makes it a prime target for US intelligence missions scrutinising the Chinese coastal military build-up. A flurry of diplomatic activity is under way in both Washington and Beijing, with President George W. Bush expressing optimism that progress is being made. Sources close to the talks said firm packages were on the table and a final deal is understood to be close. American officials now believe the collision saw the Chinese plane sweep up from underneath and hit the US plane's nose cone. The Chinese pilot is missing, presumed dead. While China has constantly demanded the US take full responsibility for the incident, Pentagon officials have been working overtime to suggest privately that over-exuberant Chinese pilots were the real cause. Neither craft was equipped with the black box flight-data recorders mandatory on civilian aircraft that could provide detailed information about the collision and who caused it. Central to the US position is the immediate release of the EP-3's 24 crew members - who remain in detention at Hainan's Lingshui airbase a week after their successful crash-landing of the plane - but also the avoidance of any formal apology, despite President Jiang Zemin's repeated demands for one. US officials say the reluctance to say sorry is driven not just by a desire to preserve international prestige but by the need to ensure surveillance activity can continue - or even be expanded. One State Department official said: 'Our people were carrying out an official mission legally in international airspace . . . strategically, we must ensure that any future activities have the ring of legitimacy.' In this regard, a bilateral settlement is probably the easiest option for both countries, according to experts on international law who warn any international court settlement could prove complex and lengthy. The rights of a military plane in distress are less clear-cut than those of civilian craft, several US officials have acknowledged privately.