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BEIJING (Reuters) - China sought to contain tension with the United States over online censorship and hacking, saying Google’s dispute with Beijing should not be over-stated, ahead of a possible challenge from Washington on Internet freedom.

Comments by Chinese Vice Foreign Minister He Yafei Thursday appeared to be part of an effort to downplay disputes and avoid further straining ties with Washington. Relations are already troubled by quarrels over trade, Taiwan and human rights.

A speech by U.S. Secretary of State Hillary Clinton on Internet freedom planned for Washington Thursday could be seen in Beijing as throwing down a gauntlet, a week after search engine giant Google said it had been the target of sophisticated cyber-spying from China.

“The Google incident should not be linked to bilateral relations, otherwise that would be over-interpreting it,” the official Xinhua news agency quoted He as telling Chinese reporters. “In the year that Obama has been in office, the development of China-U.S. relations has been basically stable,” He added.

He seemed to be seeking to play down potential fallout from the Google dispute, which could compound tensions with Washington as Congress heads into an election year.

“He’s comments show the government’s caution, in that it does not want the Google case to complicate relations with the United States,” said Zhu Feng, a professor of international relations at Peking University.

“This is not a political problem, it is a commercial one. It’s about the issues a company operating in China has come up against, and nothing to do with bilateral relations.”

CYBER ATTACK

China welcomes foreign Internet companies but demands they comply with Chinese law, the vice foreign minister said.

“If Google or other foreign firms have any problems in China, these should be resolved according to Chinese law, and the Chinese government is willing to help resolve their problems.”

He will be replaced soon as vice foreign minister, and appears likely to be given a job representing China at the United Nations, according to Chinese officials.

Google, the world’s top search engine, said it may shut its Chinese-language google.cn website and offices in China after a cyber attack originating from China that also targeted others.

Google said it no longer wanted to censor its Chinese Google.cn search site and wanted to talk with Beijing about offering a legal, unfiltered Chinese site.

Searches for sensitive topics on google.cn are still largely being censored.

Many in China see Google’s ultimatum as a business tactic because its market share trails the popular Chinese search site Baidu. Despite extensive public debate of the Google issue in China, hacking has been rarely mentioned in official media.

“Managing the Internet is a matter of national security. A lot of countries practice oversight of the Internet, and so does China. It is a very normal thing,” He said.

Facebook, Twitter and YouTube are blocked in China.

‘LOOKING FOR EXCUSES’

Weighing into the debate, Jack Ma, the outspoken chief executive of the country’s largest e-commerce firm, Alibaba, said this week Google was looking for “excuses” by blaming China.

Ma’s statement at an economic forum in Taiwan were Alibaba’s second condemnation of the U.S. search engine’s face-off with Beijing following charges of the cyber-attack.

“People who fail always make excuses,” said Ma.

“I think there are how many foreign firms that have come to China and fallen, five or six? And there are more than 5,000 fallen Chinese firms,” he said. “They say they lack government connections, lack money, lack whatever. These are just excuses.”

Alibaba Group, in which Yahoo Inc owns a 40 percent stake, runs Taobao, China’s largest online retailer, and China’s largest e-commerce website Alibaba.com.

Alibaba said in a statement earlier that Yahoo’s comment that it stood aligned with Google’s position was “reckless.”

Google’s Chinese-language search site makes money, but neither the firm nor China’s 384 million Internet users would take a big hit if it were withdrawn, said Mark Natkin, managing director of Marbridge Consulting Ltd in Beijing.

In the United States, Microsoft Corp said it would issue a patch to fix the old version of its Internet Explorer browser that allowed attacks on the Google network in China.

The patch, due out on Thursday, “addresses the vulnerability related to recent attacks against Google and a small subset of corporations,” said Jerry Bryant, senior security program manager at Microsoft.

(By Ralph Jennings and Ben Blanchard. Additional reporting by Chris Buckley, Lucy Hornby and Huang Yan in BEIJING and Argin Chang in TAIPEI; Editing by Alex Richardson)