What are your thoughts on the EP-3 spy plane incident in the spring of 2001?

I think for the Chinese it was an enormous blow to their pride. There is a real historical sense of being exploited, invaded, their sovereignty violated. And so they were very quick to take offence at obvious violations. In this case the whole incident just showed how easy it is for the United States to spy on China. And then we had the nerve after, knocking down one of their planes, to come and land on a Chinese military base. Without any interaction or permission apparently. So this seemed like an enormous insult.

...But I think for the Chinese in a case like this, as with the bombing of their embassy in Belgrade in 1998, the reaction is sad, deeply felt and emotional, throughout the population I would say. The government isn't lying when it says, we have a lot of pressure from public opinion on these issues. Again, it's a historical - reality here, that this country is obsessed with its history of the last century of oppression and invasion. And they want to be taken seriously, as an important country today. And treated like an important, dignified country-- one of the larger powers in the world. And so, I think, this incident had to have some time to play out on the Chinese side.

Do you think the leadership created the anti-American feeling or do you think there was an anti-American feeling within the country of China?

I think first of all, there is a general love-hate relationship between China and America. But it's much more dominated by positive feelings these days. And the leadership is very anxious to develop good ties with the United States, and to promote a friendly relations and good economic relations.

I don't think there were bunches of right wing generals in China that provoked this so that they could bash America. It was something that came at a very inconvenient time for both the Bush administration and for China. And both sides had to deal with this. Dealing with their domestic political realities.

Do you think however, that the Chinese military leadership used this--perhaps to show that America could be a threat? Therefore, they would need to modernize their weapons?

Well, I think this is probably one of the many incidents over the years, that the Chinese military has used to show the leadership they need more resources. The Chinese military budget historically is very low. And they have a very old fashioned army. They don't have the kind of global military capacities that the United States and at one point the Soviet Union had. And they are now trying to very rapidly modernise their military so that they can stand up and not be a joke.

This spy plane incident happened at a very early stage, in the Bush administration. were they trying to work out what his policies would be?

I think it was for the Chinese, a bit of a test case. They were very worried which direction was the Bush administration going to go. On the one side is Bush's father. He was the U.S. representative here. And he was in favor of engagement - not being too tough or too intrusive on human rights, these kind of things.

On the other hand you have a large new group within the Republican Party who are rather hottish about China. See it as a future strategic competitor or enemy. Why not try to put the screws on China in certain ways. And it has never been clear which side is gonna run out in Bush's mind. Or in this administration. So this really happened before this administration had kind of gelled.

Do they not know how the policy is going to go?

I don't think anyone knows. If you watch what's happening in the administration, Secretary of State Powell has sounded not very different from a recruitment official. You know, they have to seek friendship with China. While at the same time, each country will protect its vital interest. You get some statements out of the Pentagon, where China is a future competitor or rival, strategically; their military is growing, and we have to prepare for that day. Issues like strategic missile defence can be handled in a way that ignores Chinese interest.

So when Bush first goes to China as president the end of October 2001, do you think that he has really worked out his policy? And do you think the Chinese are gonna be content with what they discover?

I can't predict what he is going to do. Every word is gonna be watched very carefully in Beijing. This is much more important to China than it may seem to Americans. The relationship with the United States is the number one foreign policy issue, right now, for the Chinese government I think. And - and they are very anxious to find a way to have smoother relations and put the negative things a little bit to the side if they can.

What are these issues?

The Chinese leadership is far more preoccupied with their domestic situation. And economic progress than they are with foreign policy ventures. Taiwan is the big thorny issue in the middle of this. They can't give up Taiwan. That's sort of central to their national identity, their political identity. But, they don't want that to blow up in their faces either. They need Western technology, investment. They want to become a partner in the advanced nations of the world. And they can't do that if they are in a cold war with the United States. So, from their point of view, they are putting up with quite a bit of questionable criticism and intrusion on things like their human rights policies. Or other domestic issues. They are willing to live with some of that if we can have overall friendly relations.

Now, with Taiwan, at the end of the day, it really depends on what the Taiwan people and Taiwan government decide for their future. If they ever claim independence, how do you think China would react?

I think if they just outright declared independence there is no question that China would have a military action and it could cause quite a conflagration. I mean the United States is not formally committed to defending Taiwan. But certainly if it comes under attack from China the United States will take very serious action. And who knows what the consequences will be? To some degree both the United States and China are a hostage to what the Taiwanese people decide.

But on the other hand, both sides have a great deal of leverage and the Taiwanese people, whatever their true beliefs might be if they were unencumbered by the threat of mainland China next to them, so far they have been pretty pragmatic. Even when they elected a president last year whose party theoretically was dedicated to independence. He very quickly back-tracked to sort of a central position in Taiwan. If they can just preserve the status quo, preserve in a way their ambiguous status and see how things developed, they probably can live with that. And, in fact, I think the Chinese can live with that too.

What the Chinese are most afraid of is a real movement toward independence. Which they have to stop. They have to continually warn Taiwan - and the United States - that "hey, don't push us too far. Or we will be forced to react militarily." That doesn't mean they want to invade Taiwan. They have a short timetable. The number one principle--if you are a Chinese leader--is not that you have to regain Taiwan in the next five years. It's that you can't lose Taiwan.

Why do they worry about a small island, like this?

It's their unfinished civil war. It just looms very large in the in the history and mythology of the People's Republic of China. They fought a civil war with this nationalist government. They essentially defeated them. The nationalists escaped to an island which they consider an integral part of China. And then, because of American support and other intervening factors, they never finished. And I think especially for the military, this is the main reason for being. Is to prevent Taiwanese independence and some day retake Taiwan. ... I think preventing Taiwanese independence is sort of a core principle of politics here. And no politician could go against that. ...

When you look at China today, what do you see in terms of freedom?

I think everything that you have ever heard about China is true. It's freer than it's ever been, economically. People in their daily social life, they do what they want, say what they want. On the other hand, in the political arena, in publications, it's perhaps not totalitarian, but it's an authoritarian state. It does censor the news, the media. Very thoroughly. Anyone who tries to start an organization or a publication that's not sanctified by the communist party is subject to arrest. The police can send anyone to a labor camp for three years without a trial. Virtually at their whim. People who want to practice religions that are not part of the government sanctioned religious scripts - are subject to arrest at any time, or harassment. So they are very severe human rights violations going on.

They affect a relatively small number of people, compared to the 1.3 billion Chinese. But they do involve principles that are so fundamental that they in a way affect everyone. I mean, if the press is controlled, this affects the information available to all 1.3 billion people. And ultimately it affects the ability to stop corruption. If there were a free press, one man couldn't bribe several hundred officials in the south- as one did recently and has now, fled to Canada. And make billions of dollars through smuggling. The many people knew about this but the local communist party did not allows the press to write about it.

So those Americans who say Amercia can't do business with China--are they right?

Well, I think it's a country that we can do business with, very cooly. And in fact when it comes to formal agreements and international agreements, the Chinese record is pretty good I think most diplomats would say.

It is a country with an uncertain future. It is a country with many aspects that--in terms of American values--we don't find very attractive. And I think that many American scholars and diplomats and other experts believe that the issue of human rights is not just a moral one but is central to the future of China and to a more prosperous society. The communist party's answer is that - "hey, without us the country will fall apart, so we need to keep this repression indefinitely while we gradually reform and move toward a more open society. And first, let's just make more money. That's our priority."

I think there are many Westerners who feel that the pressure is building up within this rather cluttered system. Unless in this fast paced information age they allow more free information, then they [will] fall behind and end up with the very kinds of conflicts they are trying to avoid.

Well, some people believe that with this enormous economic kick, with economic improvement, that there are inevitably going to be political changes. Do you see signs of this happening?

Well, there are some signs of change and other signs that nothing is changing. And I think that in the long run, certainly if they create a large middle class and a capitalist economy, it seems inevitable there will be new interest groups. And new ways of political expression and with the internet and so on, more ways for people to get information and express it.

But that's the long run. In the next five, ten years, I don't think it's automatic at all that there's going to be progress toward democracy here. The leadership said very clearly the communist party must retain its monopoly on political power; that's the basis of our country's stability and its economic development, and that will not change. And they back that up with the police force.

For example, over the last three years--a time during which they have negotiated their entry into the World Trade Organization--which you would say is a liberalizing influence--during that very same period censorship here has actually grown worse. And scholars might have written something three years ago and had it published. Today, if they write that, either it will not get published, or if it is, they might get questioned by the police.

So the one woman who wrote a book [Editor's Note: Dr. He Qinglian, author of The Pitfalls of China's Development] about the problems of corruption and the economic change occurring here, that [book] was a few years ago praised by some of the top leaders. And then this summer, she had to flee the country because the police were about to arrest her for the same writing. So I think on the one hand the economic opening will bring more outside influences and in a way more chaos to the country which is not a bad thing in some ways. But the leadership is very worried about that. And so they are right now trying to sort of batten down the hatches and prepare for this onslaught of influences and try to keep in control. So that means there may actually be more human rights violations in the first five years after they join WTO, than there were before.

What kind of freedoms, opportunities do the ordinary people today?

Well, compared to twenty years ago, the average person now has the freedom to quit their job and find another job. If they have money, they can go rent or buy a house. People are even buying cars now. It's fantastic for the small minority that can afford that. But there is a legacy from the past that really is quite repressive toward the majority of the population. There is a system of residence controls. If you are lucky enough to be born in a city - and registered as a city dweller--it's easier for you to get into university. You are in the city, you can work at all the large companies and government agencies in the cities. If you are registered as a rural person, there are very severe restrictions on where you can live and work. And to my mind this is actually the biggest human rights problem in China today. You have a majority of this population of 1.3 billion, that are, by law, second class citizens.

What if the people can't move?

If you live in a rural area or small town you cannot just pick up and move to Beijing or Shanghai and get a job and work legally. Now, there are tens of millions who go illegally. But they are treated very much like, say, illegal Mexicans immigrants in the United States. They are an underground economy. They are subject to police harassment. There's a whole vast system of detention centres just for illegal migrants. Where they send them to the sanctuary, then send them back home. Make them pay for the train ride and pay for their food.

These are people who are starting with nothing on their home farm. You know, there are many families here who have less than one fifth of an acre of land. And they can't live off that. So some members of the family go to the city, and they might work for fifty or sixty dollars a month. Doing the dirty work of society. You know, cleaning the garbage. Being maids so on and so forth. And yet by law they are not allowed to put down roots in this new city. And they are not allowed to hold higher jobs either. There is actually a set of rules in Beijing--a migrant who goes through legal procedures and gets a permit to temporarily work in Beijing, and live in Beijing, can hold menial jobs in a hotel. But cannot be a hotel desk clerk. Even if you are well educated and you have a temporary permit.

Now, the system is gradually loosening--especially the needs of high tech, trained personnel, is causing the emergence of more and more loopholes, where people with good training or a company who will sponsor them, can get permission to move. But for you are average poorly educated, rural person, its still very difficult.

Could you give me an example of the sort of job which these people who come from the provinces would work at?

Well, here in Beijing there is a fantastic underground economy involved in garbage recycling. One person did a study; there are something like eighty thousand people, most men, but men and women, all of them illegal migrants. Originating from the southern provinces like Sichuan. And in fact, a huge number of them are just from one county in Sichuan. It's like relatives and friends told each other about it. And a few of the original people have formed these vast organizations. It's a very organized business. People go out and collect garbage from city garbage dumps where the garbage is initially put, and go through it. And some collect plastic bags, some collect plastic bottles, some collect glass. There are others who go around to restaurants and actually buy the left over food waste. And the left over grease, for oil.

And the food is then sold to pig farmers outside the city. The oil is use to make soap at soap factories. There are centers around town where these migrants ride on tricycles. Its all very primitive. They'll spend a day collecting - whatever it is they collect--old pieces of wood. Or there are some who collect rubber soles from old discarded shoes. And they'll ride with hundreds of pounds on the back of their tricycles, and ride out to a particular center. And sell it to a middle man, at a slight profit. And then that gets sent on to a factory somewhere that recycles it.

And yet these 80,000 people--they are actually illegal?

Virtually all of them are here illegally. They are subject at any moment to being arrested. Detained. Sent back home. Having their tricycles, which is their only real possession, confiscated. They are treated pretty badly. They are performing a great service for the city. But the government up till now, has not done well to make it easier for rural people to live here. They don't want to have vast slums which is what they are afraid of. They want to protect - the job market for urban residents. And protect the price of labour. If rural people were free to move into the cities, then the average wasges would go down quite a bit. And I think the government is much more afraid politically of unrest among the urban workers than they are of the scattered rural population which they can control.

But when you have a rural population of what - eight hundred million? And sweeping changes may happen as China joins the World Trade Organisation. Isn't it sort of justifiable in a way to stop these millions coming into the cities?

Well, I think it is by Western standards a real violation of just personal life style. According to where you are born, your opportunities are different. I mean, it is even to the point there there's one national exam to get into universities in China. If a student in Beijing scores, lets say five hundred out of seven hundred he or she will get into a good university. A student in a rural area has to score five hundred and fifty or five hundred and seventy five to get into the same university. There is actual discrimination against rural people.

And I think there are a lot of rural people, who are beginning to get a sense of their rights. They see American movies. They hear their leaders constantly talking about Chinese laws and constitution and rule of law, and they are starting to believe some of it....

So I think this has all got to change. And the economic pressure will be for change too. Yes, I can understand that government doesn't want to have fifty million migrants suddenly living in the outskirts of Beijing. But I think the system is very rigid and inhumane right now.

This government was brought to power by the workers' revolution. They called it a workers revolution. Do the workers have rights over here?

Well, this was founded as a workers' state. Workers and peasants are the foundation of the socialist revolution. The workers have less and less power over time. The traditional workers who are called masters of the nation are being turned out into the street. They are being laid off. And there have been a lot of protests. And the government is very worried about that. And as capitalist development takes place and foreign investment, a lot of rural people are becoming factory workers--unskilled workers, for very low wages. Very poor conditions. Some call it sweat shop labour. And,the government does not allow labor to organize, except through a communist party run union, which sometimes helps to protect workers, other times, is under the sway of local government officials who may be more interested in seeing a factory prosper, so they can collect taxes. Or bribes or whatever. So the state of worker rights is not great right now in China.

What freedoms or restrictions do you face as a journalist working here?

Well, foreign journalists in China don't face any actual censorship. We are free to read what we can get our hands on. We are free to write what we want to. What we believe. And we send it by e-mail to our headquarters, and it gets printed with the help of our editors in New York. But we are very restricted in our travel. We are not supposed to got to most areas of the country and do any reporting without getting the permission of the local government. And usually being accompanied by a government official. And it makes it very difficult to get an honest answer from anyone. To get an honest look at what's going on.

The other thing is that, many people, even in Beijing, for example, professors who know a lot may feel a bit worried to be too frank with us. Sometimes people just say, I can't do an interview with you. Or when they do they sort of parrot the party line. Instead of what they really know is going on. Because they are worried that if they speak too frankly they may get quoted in a foreign newspaper and this will be used against them. It could cost them their job. Or a promotion. Or in extreme cases could get people arrested even. So I think the situation for journalism is more and more open over time. But there still are some tough restrictions.