(Adds U.S., Chinese comment, detail)

By Michelle Nichols

UNITED NATIONS Dec 23 (Reuters) - The United Nations Security Council failed on Friday to adopt a U.S.-drafted resolution to impose an arms embargo and further sanctions on South Sudan despite warnings by U.N. officials of a possible genocide in the world's newest state.

There were seven votes in favor and eight abstentions. A resolution needs nine votes in favor and no vetoes by the United States, France, Russia, Britain or China to be adopted. Washington called for a vote on Friday knowing it would fail.

The United States could not even win over its ally Japan, which last month deployed troops to a U.N. peacekeeping mission in South Sudan. Japan, Russia, China, Angola, Malaysia, Venezuela, Egypt and Senegal all abstained.

"The council members who didn't support this resolution are taking a big gamble that South Sudan's leaders will not instigate a catastrophe," said U.S. Ambassador to the United Nations, Samantha Power. "It is the people of South Sudan who will pay an unbearable price."

She said the United States was prepared to push for another vote on an arms embargo in the future.

"We're not in favor of using sanctions to exert pressure on developing countries," China's Deputy U.N. Ambassador Wu Haitao said. "There needs to be prudent actions with respect to embargoes and designations to avoid complicating the situation even further in South Sudan."

The resolution had also proposed blacklisting South Sudan opposition figure Riek Machar, army chief Paul Malong and Information Minister Michael Makuei.

Political rivalry between President Salva Kiir, an ethnic Dinka, and Marchar, his former deputy, led in 2013 to civil war that often has followed ethnic lines. The pair signed a peace deal last year, but fighting has continued. Machar, a Nuer, fled in July and is now in South Africa.

"This resolution would not have been a panacea, we are not naive," said Power, though she added that the measure would have cut arms sales to a state that "instead of feeding its people is amping up and arming up for an increasing ethnic conflict."

U.N. Secretary-General Ban Ki-moon on Monday told the Security Council that he feared genocide was about to start in South Sudan unless immediate action is taken, renewing his months-long plea for an arms embargo.

South Sudan's U.N. ambassador, Akuei Bona Malwal, said such descriptions were exaggerated and did not "reflect the reality on the ground."

U.N. peacekeepers have been in South Sudan since the nation gained independence from Sudan in 2011, and there currently are some 13,700 U.N. troops and police in the country.

(Reporting by Michelle Nichols; Editing by Bernadette Baum)