A senior American diplomat arrived in Beijing yesterday raising speculation that the escaped dissident Chen Guangcheng will be allowed to leave for the US.
Friends of Mr Chen have said that the blind legal activist took refuge in the US embassy in Beijing on Thursday afternoon.
The 40-year-old made a remarkable escape last Sunday night from his home where he had been held under house arrest for almost 20 months.
His daring getaway and presence at the US embassy has dramatically heightened tensions between Washington and Beijing, ahead of high-level talks due to start this Thursday in the Chinese capital between Hillary Clinton, the US secretary of state, Timothy Geithner, the treasury secretary, and China's leaders.
The arrival of Kurt Campbell, assistant secretary of state, is an indication that both the US and China are desperate for Mr Chen's fate to be decided before the talks commence.
Although his fellow dissident Hu Jia told The Sunday Telegraph that Mr Chen wanted to remain in China to continue his fight against human rights abuses, staying is no longer thought to be a feasible option.
In a video posted online following his escape, Mr Chen called on Premier Wen Jiabao to prosecutor local officials who have subjected him and his family to repeated beatings during his time under house arrest, for his family to be protected and Premier Wen to act to end official corruption in China.
It is highly improbable that China's leaders will accept being dictated to by such a high-profile dissident and a man they regard as an enemy of the state. Nor is Mr Chen likely to agree to whatever offer they make.
"I think Chen would prefer to stay in China but only if the Chinese government agree to the demands he made in the video he released on Friday," said Nicholas Bequelin, the senior Asia researcher at the Hong Kong office of Human Rights Watch.
"I don't think it is possible to convince him to agree to any deal proposed by the authorities. And he won't want to stay in China if it means returning to house arrest and being held in permanent limbo. In China, house arrest can go on for a lifetime."
At the same time, Washington is well aware that caving into pressure from the Chinese to return Mr Chen to their custody would have a disastrous effect on public opinion both in the US and worldwide.
"It would be politically very difficult for the US to hand Chen back without his agreement. They can't just frogmarch him out of the embassy," said Mr Bequelin.
Mrs Clinton has repeatedly called for Mr Chen's release in the past, while with an election looming in November President Barack Obama is already under fire in the US for not doing more to stand up to the Chinese over their refusal to make their currency more competitive.
One possible compromise is for Washington to request that Mr Chen, who has been blind since early childhood and who injured himself in his escape, be allowed to travel to America for medical treatment. The only other dissident to have taken refuge in the US embassy, the astrophysicist Fang Lizhi, was allowed to leave for the US on medical grounds despite his role in the 1989 pro-democracy protests in Tiananmen Square.
Any deal is likely to include Mr Chen's wife and daughter, who remain in the family home along with his mother in the village of Dongshigu in eastern Shandong Province. The house is now surrounded by local authorities and it is impossible to contact them. Far more uncertain, though, is the future fate of Mr Hu and the other activists who aided Mr Chen in his escape. All have been detained, along with Mr Chen's brother and nephew. At least one other member of his family is thought to be on the run.
Illiterate until his early twenties, Mr Chen taught himself law and rose to prominence in 2005 for exposing a policy of forced abortions and sterilisations in Shandong Province. Imprisoned in 2006 for four years on trumped-up charges, he was placed under house arrest immediately after his release in September 2010.