WASHINGTON, May 17 (UPI). Clinton administration hopes for avoiding more human rights friction with China were dashed Wednesday by Beijing's rejection of Tibet's choice for its second most important Buddhist monk, U.S. officials said.

The Clinton administration Wednesday urged Beijing to respect Tibetan religious rights and to settle differences over selection of the Panchen Lama in the "spirit of tolerance and understanding."

"Religious freedom is an essential right recognized in several international human rights declarations and covenants," the State Department said in a prepared statement responding to inquiries the pse authorities with power over Tibetan religious affairs rejected the Dalai Lama's choice for the new Panchen Lama and accused him of subversion.

"This is totally illegal and invalid," a spokesman for Beijing's Bureau of Religious Affairs said in a prepared statement, which U.S. officials in Washington shared with United Press International. "This fully demonstrates the political plot of the dalai clique in its continuous splittist activities."

U.S. officials expressed disappointment with Beijing's position on the matter and issued a somewhat stronger statement later Wednesday protesting China's "harsh" decision.

"We're concerned that disagreements or controversies about the reincarnation of the Panchen Lama might raise additional doubts about the Chinese government's commitment to respect the religious beliefs and practices of Tibetan Buddhists," State Department spokesman Nicholas Burns said.

Recognition of Tibet's religious freedom and opening a dialogue with the Dalai Lama was one of Washington's conditions for renewing low tariff trading rights in U.S. markets. President Clinton severed the link last year between most favored nation status and improvement in China's human rights record, but said he would continue pressing the issue.