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U.S.-Chinese relations dropped to 16-year low this weekend with the departure of ambassadors from both capitals. But the diplomatic row remains more cosmetic than authentic, observers say.

Western and Asian diplomats believe that neither Washington nor Beijing intends to damage the profitable flow of bilateral trade and that their political maneuvers are meant to save face.

At the core of the quarrel is Washington’s decision earlier this month to grant a visa to Taiwan President Lee Teng-hui, so he could attend events at Cornell University in Ithaca, N.Y.

Beijing, which considers Taiwan a renegade province, saw this as an erosion of U.S. policy to recognize only one China.

Outraged, the Chinese government threatened “serious consequences” and promised retaliation. The Chinese canceled or postponed visits by U.S. officials- including Commerce Secretary Ron Brown’s scheduled trip-cut short their high-level military mission to the U.S. and pulled out of missile control talks.

“Everything is on ice right now,” a U.S. official said. But he believed that no commercial deals have been affected.

In a laconic statement Saturday, China’s Foreign Ministry announced it was withdrawing Li Daoyu, its ambassador to Washington. His withdrawal is the first serious breach between the nations since 1979, when the U.S. ended years of diplomatic coziness with Taipei in favor of establishing relations with Beijing.

Perhaps by coincidence, U.S. ambassador to China, J. Stapleton Roy, also left his post Saturday without fanfare or farewells. The State Department said the ambassador was on a routine rotation. But informed sources in Beijing believe his early departure was due to a rift between the State Department and the administration over the Taiwan visa issue. The State Department opposed the visa.

Roy, a career diplomat, has been assuring the Chinese government that the U.S. has not retreated from its declaration that Taiwan is part of China. That statement was made in a communique issued in 1972 after then-President Richard Nixon’s landmark visit to the mainland.

Born in China as the son of missionaries, Roy speaks fluent Mandarin and was highly respected for his skillful handling of the difficult bilateral relations.

In Washington Saturday, U.S. officials said a senior envoy might be sent to Beijing for fence-mending talks aimed at salvaging the crucial diplomatic relationship, Reuters reported. But China has not replied to the plan that Undersecretary of State Peter Tarnoff go to Beijing, the news agency said.

Meanwhile, Western observers in Beijing believe the Lee visa case is being exploited by the Chinese as a “you owe me” lever to win U.S. support for Beijing’s membership in the World Trade Organization and to stifle growing clamor that China neither respects human rights nor international property rights.

This month the Clinton administration extended China’s most-favored-nation trade status, worth billions of dollars in reduced import tariffs. But human rights groups argued that basic rights continue to be violated in China.