The escape of a Chinese activist championed by Washington and now said to be under US protection is hugely embarrassing for Beijing and comes at the worst possible time ahead of US-China talks, analysts say.

Both countries have maintained absolute silence on the whereabouts of 40-year-old blind lawyer Chen Guangcheng since his audacious flight from house arrest eight days ago, underscoring the extreme sensitivity of his case.

Friends of Chen, who served four years in jail after exposing rights abuses under China's "one-child" policy, say he is holed up in the US embassy but is not seeking US asylum, raising the spectre of a drawn-out diplomatic wrangle.

US Secretary of State Hillary Clinton, who is due in Beijing on Wednesday for high-level talks with Chinese leaders, has repeatedly criticised China's treatment of the activist and demanded his release from house arrest.

"The timing really couldn't be any worse," said Jean-Pierre Cabestan, China expert at Hong Kong Baptist University.

"There is a shared code of silence. It is in both countries' interests to minimise the affair and separate it from the rest. That is why they have not confirmed anything, and are keeping a low profile."

Washington has reportedly dispatched senior US diplomat Kurt Campbell to Beijing to try to contain the looming crisis ahead of the annual economic and political talks between the two world powers, scheduled for Thursday and Friday.

But resolving the issue before the talks -- expected to cover China-US cooperation on such highly sensitive global problems as Iran, Syria and North Korea -- will be a huge diplomatic challenge.

The fate of the self-taught legal activist, who has been blind from childhood, has made headlines around the world and observers said it would be unthinkable for the United States to release him into the hands of the Chinese.

"Everyone recognises that he is a victim, someone highly respected," said Beijing-based China expert Michel Bonnin, adding that Chen was unlikely to be easily persuaded to go into exile -- the solution most likely to be acceptable to Beijing.

"Dissidents can do nothing to advance their cause from abroad," he said.

If he is unwilling to leave the country, the United States might be forced to keep Chen in the embassy indefinitely -- a constant reminder in Beijing of the government's loss of face.

Analysts said the only other likely scenario -- a guarantee from China that it will respect the rights of Chen and his family if he leaves US protection -- was unlikely.

Cabestan said the United States was "playing for time" while it sought a solution to the thorny question of what to do with Chen, with Beijing likely furious at the way the situation has turned out.

"But what can they (Chinese) do? They can't very well go in and get him," he added.

Chen's flight to the US embassy is particularly sensitive for Beijing because it comes just months after Wang Lijun, former right-hand man of disgraced leader Bo Xilai, went to a US consulate and reportedly asked for asylum.

Wang is said to have handed documents that incriminated Bo to US officials, leading to the downfall of one of the country's highest-profile leaders and sparking the biggest political drama to hit the ruling Communist party in years.

"This (the Chen affair) will affect not only the relations between China and the United States, but also the image of China after the Bo Xilai affair," said Cabestan.

The last time a Chinese dissident sought refuge in the US embassy was in 1989.

Fang Lizhi, an academic and supporter of that year's Tiananmen Square pro-democracy demonstrations, remained at the embassy for a year before leaving in 1990 for exile in the United States with his wife.

The United States' refusal to hand him over to the Chinese authorities sparked a major row.

Human Rights Watch analyst Phelim Kline said the Chen affair was the "diplomatic equivalent of a slow-motion car crash".

"Ensuring the protection of Chen Guangcheng, his family and supporters from official reprisals will require a degree of flexibility and artful diplomacy that the Chinese government may be unable or unwilling to conjure," he said.