As mainlanders who have applied for US visas will attest, these interviews, held at US consulates, are far from formalities. There often seems to be little obvious reason or consistency behind decisions to grant or deny visas. As a result, many planned US trips by provincial, city and county officials, and heads of state-owned and big private companies who hold such passports, have been cancelled or postponed.

The Sars outbreak, and the resulting slump in travel, initially masked the effect, but now it is being acknowledged by many US-based organisations due to host Chinese visitors.

'On the one hand the Americans complain we don't buy their stuff, yet on the other their visa application process stops our people from visiting the US. Isn't it ridiculous?' said an official at the Consulate General of China in New York, who declined to be named.

One of the events hurt by the change in policy was the Sino-US Investment Opportunities conference, held in New York from Monday until Yesterday. Already delayed once because not all the Chinese participants could be officially interviewed in time, it went ahead with just 25 of the 65 mainlanders registered to attend. 'We had heard of the visa problem. Now this brings it home,' said Ming Shu, president of the North American Chinese Merchants Association and conference co-organiser.

Two big exhibitions in New York, held in September, lost about 70 booths collectively, because the Chinese exhibitors could not secure visas, leaving one exhibition organiser in a hole. 'The visa thing just put my business at risk,' said Sean Zhu, the general manager of New York-based company International Pacific Exhibition. 'If the exhibitors cannot come, I have to absorb the loss on renting booths.'

The visa issue has caught the attention of those at the top levels of the central government. The postponement of a soybean buying mission to the US last month may well have been a retaliatory warning shot to the Americans in response to a plan to impose quotas on Chinese-made bras and other garments, but the official line was a lack of visas for the delegation.

'While we quite understand the necessity of America's homeland security, we are not willing to see American visa policy affect the economic and cultural exchanges between China and the US,' said Yuan Zhanling, the Economic and Commercial Counsellor at China's consulate in New York.

'The government officials and CEOs are very busy. Sometimes they would rather give up the trip than make an appointment a month earlier and stand for several hours in a queue to wait for an interview,' said Mr Yuan. 'I believe our government is going to seek some diplomatic solution to this problem.'

Cultural exchanges are also being hampered. When the International Academy of Television Arts and Sciences held its International Emmys Awards ceremony in New York at the end of last month, the Chinese presence was much thinner than planned. Bruno Wu, the chairman of Sun Media Investment Holdings - who was also the first Chinese chairman of the ceremony - invited 12 Chinese cultural officials to attend, but only two could get visas. 'I wanted to show the officials the International Emmys Awards so they could help us to get more entries from China,' said Mr Wu. 'But it's unbelievable that even people at director-level are declined [visas]. This really makes me concerned about the future of Sino-US exchanges.'

In the area of education, even Yale University president Richard Levin said last month that America's reluctance to issue visas following September 11 threatened to slow the entry of foreign students, including those from China, to American schools.

'In the past two years, we've had a number of Chinese students who have had to defer entry for a year due to a delay in obtaining a visa,' Mr Levin said in an interview in Beijing. 'We don't want our students saying we might as well go to Britain rather than the US.'

A spokesman for the US Department of State declined to comment on the impact of the end to the PAP visa exemptions policy on Sino-US ties. 'This is a universal standard. China, like any other country, falls under the policy. China is not an exception,' the spokesman said.

But the policy has a greater impact on China - hardly the most likely source of terrorists plotting attacks in the US - than some European countries from which terrorists have been found to have operated from. This is partly due to the long queue of Chinese seeking US visas - it can take up to two months to get to the interview stage - and the traditional rejection of large numbers of non-PAP holders by US consulates on the mainland.

'A lot of it is also psychological,' said Samuel Shi, the president of All American Exposition Inc, a travel agency in Los Angeles that arranges US tours for Chinese delegations. 'The officials are not used to going to the consulate and being questioned like primary school students.' Mr Shi said his business had dropped by 30 per cent since the policy change.

For Americans wanting to go to China, the story is markedly different. 'This is really unfair. When American people apply for a China visa, they are not required to do an interview and most of the time can get the visa on the same day they apply,' said the Chinese Consulate official in New York.

For those trying to increase economic ties, frustration has set in. 'The theme of our conference is bridging the gap between the US and China,' said Ming Shu. 'But it's so disappointing to see one side cannot walk across after the bridge has been built.'