NEW YORK - World champion Shawn Johnson experienced her first hiccup in a campaign to become the next US Olympic gymnastics darling when she was beaten to the American Cup title by compatriot Nastia Liukin.

US gymnast Shawn Johnson competes on the uneven parallel bars at the Tyson American Cup men's and women's gymnastics competition at Madison Square Garden in New York March 1, 2008. [Agencies]

Yet United States coaches spun the surprise result as a win-win for the women's team that expects to battle China, Russia and Romania for supremacy in August's Beijing Olympics.

"The close competition is inspiring everybody to work hard and just shows that nobody has places nailed down to the ground," Martha Karolyi, coordinator of the US women's gymnastics team told reporters at Saturday's international event. "You have to improve yourself."

It was the first time that Johnson, 16, had tasted defeat since joining the seniors' ranks in an all-conquering 2007 campaign in which she won the US nationals and the world all-round title.

Liukin, two years older and the winner of nine world championship medals, showed she was fully back in the frame after recovering from an ankle injury that held her back last year.

"It's going to be a tremendous competition, particularly between these two," Bela Karolyi, Martha's husband and famed coach who is chief of the US team training centre at the couple's Texas ranch, said about the Olympics.

Johnson's coach, Qiao Liang, did not see the Cup result as a setback for his gymnast, who fell during the opening rotation in an attempt to land the difficult Yurchenko vault with two-and-a-half somersaults for her first time in competition.

"I think that's a very difficult vault, only three people are doing it in the world," said Qiao, a successful Chinese gymnast who settled in Iowa more than a dozen years ago after going to college there. "We are planning to do it in Beijing.

"She made a mistake on that but I think it was a valuable one, a great learning experience.

"Other than that, it was a great performance. She not only demonstrated she is a very powerful gymnast but, as far as mental strength and her attitude, she showed she's a champion."