China lost.

Having vastly overplayed its hand on the Hainan Island incident, China was forced to accept a virtually worthless letter from the United States. Having demanded at the very highest level an apology -- indeed publicly trotting out President Jiang Zemin to make the demand -- all they got was the Letter of the Two Very Sorries.

The more ardent American globalists will complain that being the sole superpower means never having to say you're sorry. But these Two Very Sorries were meaningless.

We are very sorry about the death of the Chinese pilot. Well, when a sparrow falls in Shanghai, the United States and its people are also sorry. Our hearts are large. Big deal.

The other sorry was a carefully crafted expression of regret for the most minor and technical violation: the emergency landing at Hainan that was made without prior verbal permission from the Chinese side. This is the diplomatic equivalent of being involved in a head-on car crash that leaves the other guy dead, then expressing regret for having had a burned-out taillight.

And look who signed the letter. Not the president, not even the secretary of state, but the resident ambassador. Don't think the Chinese don't notice.

The worst thing in the letter for us is the largely overlooked line saying that "we appreciate China's efforts to see to the well-being of the crew." It would have been better not to express appreciation to people who held our people hostage for 11 days.

Nonetheless, this is a minor flaw. The real diplomatic issue was the apology for the main event, the collision. We gave nothing. The real strategic issue was continuing American spy flights around China. We gave nothing.

We said that "we acknowledge your government's intention to raise U.S. reconnaissance missions near China in the meeting," on April 18. They raise; we rebuff. Even the phrase "near China" contradicts the Chinese position that these flights were occurring in Chinese airspace.

The Chinese know they lost. They know that Jiang Zemin lost face. That is why the People's Daily that came out just hours after the deal called for the Chinese people to turn their anger over this incident toward efforts to build socialism. In other words: Forget it, folks, and get back to work. (Yes, they might keep the plane. But they already had the plane. And we do the same whenever an adversary's plane lands on our soil. Such are the rules of the game.)

There are more costs for China, beginning with a change in congressional and public opinion about China. We will hear no more of President Clinton's fatuous declaration that China is America's "strategic partner." President Bush speaks for the new national consensus when he declares China a "strategic competitor."

China lost. But it is not yet a win for us. For that we must make China pay a price. There has to be a cost for buzzing a U.S. plane, causing a collision, taking the plane apart and holding the crew hostage.

You don't try to extract that cost while they're holding our guys. The administration played that coolly and correctly. But now that they are out, it is time to show some steel.

When Yemen voted against the Security Council resolution authorizing force against Iraq, Secretary of State James Baker told the Yemenis: "That was the most expensive 'no' vote you ever cast." It is important to make the Hainan incident -- for China -- a most expensive act of calculated petulance.

This was all about prestige. As it happens, China is desperately trying to obtain the 2008 Olympic Games. The regime covets the prestige and recognition uniquely conferred by the Olympics.

As it happens, we have a big say in whether they get it. We should make absolutely clear that our post-Hainan say is: No. Their violations of the norms of international behavior -- harassing our planes in international airspace, holding our people hostage, demanding apologies for an action for which they were responsible -- make them unfit for the legitimacy that comes with holding the Olympics.

Some queasy allies, and pliant China hands, will argue that the Olympics will help to liberalize and open China. Nonsense. Whenever powerful party dictatorships have held Olympics they have used it not to liberalize and open up but to glorify their rule and increase their power. Thus the Nazi Olympics of 1936 and the Soviet Olympics of 1980. We need not add to that list the People's Republic Olympics of 2008.

Nor do we stop there. We should make noises about reconsidering China's trade status, pending a change in its behavior. And we should begin increasing military aid to Taiwan. All that, and the Olympics -- for the Two Very Sorries. This could turn out to be the most expensive letter China ever extorted.