(Recasts, adds details)

By Chris Buckley

BEIJING, Aug 28 (Reuters) - In the uproar over Russia's fight with Georgia, China has stood out by its reticence, seeking to protect ties with Moscow while voicing concern about a territorial break-up that could set a precedent it fears.

Western powers have warned Russia to leave all Georgian territory. China has confined itself to calls for a peaceful resolution to the crisis, which erupted earlier this month when Russia launched an overwhelming counter-attack after Georgia tried to retake its breakaway province of South Ossetia.

But after Moscow recognised South Ossetia and a second disputed region, Abkhazia, as independent, China said on Thursday it was "concerned".

"We understand the complex history and realities of South Ossetia and Abkhazia," Chinese Foreign Ministry spokesman Qin Gang told reporters, repeating an earlier written statement.

"Reflecting China's consistent stance on such issues, we hope all the parties can appropriately resolve the issue through dialogue and consultation."

Beijing and other members of the Shanghai Cooperation Organisation, a central Asian security group, also urged a peaceful resolution at a summit in Tajikistan on Thursday.

China is grappling with an international crisis in which it is big enough to matter but too modest in reach to take a decisive side, said analysts.

"China can't do much in a dispute like this," said Zhao Huasheng, an expert on Russia at Fudan University in Shanghai. "It can't influence Georgia and it can't influence Russian policy on Georgia ... That's beyond our scope."

LOW PROFILE

As it seeks to bolster brittle relations with Russia without alarming the West, Beijing is likely to keep a low profile on the dispute, said Bobo Lo, an expert on China-Russia relations at the Centre for European Reform in London.

"This is a fight China doesn't want to be in the middle of ... They really wish Russia would pull its head in a bit," he said. "Beijing doesn't want a Russian-Chinese convergence here that appears threatening to the West."

That view has been echoed by other developing powers, including India and Brazil, which have also stayed mute while the United States and Western Europe lashed Russia.

"India is facing its own share of separatist rebellions, so it can't be seen as opening its mouth too much," said Shashank, a former foreign secretary who uses only one name. "This is not a right or wrong issue. There are all kinds of grey."

For all the talk of China's rise, the government generally avoids wading into international disputes outside its immediate neighbourhood unless forced by international pressure.

But Chinese President Hu Jintao has also long courted Russia, a long-term adversary whose oil and gas China covets.

The two countries have settled long-standing border disputes, Hu has visited Russia several times as president and new Russian President Dmitry Medvedev visited China in May, his first foreign trip as president outside the Commonwealth of Independent States.

China and Russia also both scorned as Western-led meddling the "colour revolutions" that installed liberalising leaders in former Soviet states, among them Georgia's Mikheil Saakashvili.

But Beijing has also kept a distance from Moscow's actions, raising a diplomatic eyebrow over recognition of South Ossetia and Abkhazia, breakaway territories where many inhabitants support Russia.

With territorial and sovereignty disputes of its own, especially over the self-ruled island of Taiwan that Beijing considers its own, China also appears wary of precedents set by such disputes, said Lo.

"Of course, there are important differences," he said. "But if you talk about effective control, you can make a direct analogy with Taiwan." (Additional reporting by Ben Blanchard in Beijing and Krittivas Mukherjee in New Delhi; Editing by Alex Richardson) (chris.buckley@reuters.com; +86-13501014479)

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