Experts said they feared the Clinton administration's decision to stop the $450 million sale to China could signal a major policy shift that could give European firms the opportunity to topple American manufacturers from their leading position.

The commerce department blocked satellite industry leader Hughes Electronics Corp from selling satellites to China due to a potential threat to US national security. Experts said that among the concerns were that the technology could be used by the Chinese military to perfect nuclear weapon launchers.

``There is a concern in the industry about this deal being blocked,'' said one senior executive, who asked not to be named, at a top US satellite maker.

``The United States is not the only source of satellites. The Europeans build good satellites. If we can't sell them, customers can get them elsewhere.''

He added that the industry is hoping the decision, which White House officials said was specific to the Hughes deal, was a once-off aberration.

``This is a multibillion dollar business and it provides thousands of jobs,'' the source said. ``We hope this is a one-time event and that there will not be a general disruption of the flow of satellites. But if this were to be a broad policy change it would really affect the industry.''

Experts said the move was no surprise following recent congressional hearings into allegations that Hughes and Loral Space & Communications Ltd transferred sensitive technology to China after satellites belonging to them were destroyed in Chinese rocket explosions in 1995.

The US government said this month it would review whether national security was hurt by high-technology deals with China, as a congressional panel headed by Rep Christopher Cox, a California Republican, charged last year.

Launching satellites in China is becoming increasingly popular due to low costs there. A launch in China can cost as little as $30 million compared to up to $100 million for a launch in the United States.

Given those low prices, customers from all over the world are choosing China as a launch pad for their satellites. Some experts estimate as much as 20 per cent of the world's satellites are either launched in China or sold to consortia which include Chinese interests.

Experts said that many customers may decide to buy from European companies if they expect difficulty in obtaining an export licence for a US satellite destined for China.

``If you are going to reserve the China market for the Europeans... it will give the Europeans the cash flow to improve the quality of their products and beat us over the head in other markets,'' said Joel Johnson, spokesman for the Aerospace Industries Association.

Johnson added that US companies could find their superior technology being challenged if European manufacturers can drum up extra Chinese business to boost their research and development coffers.

Hughes sells more than $2 billion worth of commercial satellites each year, while Loral and Lockheed Martin Corp each sell about $1.5 billion annually.

The leading European makers include French company Alcatel Alsthom, England's GEC-Marconi's Matra Marconi Space and Germany's Daimler Chrysler AG's Dasa aerospace division.