...One of the issues that will be discussed at this very important [October 2001] meeting between President Bush and President Jiang Zemin will be Taiwan. Prior to the World Trade Center attack, people -- certainly academics -- have called the Taiwan Strait and the issue of Chinese and American tensions over Taiwan one of the most dangerous situations in the world. Why does China feel so strongly that Taiwan independence would be an act of war by Taiwan?

Because Taiwan is part of China. It has been part of China since ancient times, and it's just because of some of the separatist attempts of certain people on Taiwan and the interference from foreign forces that Taiwan is still separated from the motherland.

I think that people can understand that when a country is divided its people will like to see the country reunite, especially in the case of China, which has suffered so much in the past. So I believe that what we are doing has the support of the peace-loving people in the world and we are seeking peaceful unification -- one country, two systems, is our basic policy. We are striving for that. Of course, we will not make a commitment to go to the use of force. We do not make this kind of commitment precisely because we want to see the peaceful reunification of the country. If we should make such a commitment, it will only make peaceful unification impossible.

And there are some events in Taiwan which really cause us grave concern. Some people are openly campaigning for Taiwan independence and, of course, we have also been concerned by U.S. arms sales to Taiwan and other things. We have urged the American side to abide by the three joint communiqués between the two countries and to stop selling weapons to Taiwan. Because people should understand that now on the island, more and more people, even according to opinion polls, show their support for peaceful unification and one country, two systems.

And many people have come over to the mainland to settle down. People say in the Shanghai area there are hundreds of thousands of Taiwanese who, according to a recent opinion poll, they find life in Shanghai area most comfortable, and they would like to continue to stay there, and they might like to bring their relatives over. And I hope people will just crisscross the Taiwan Strait. In that way, we can enhance people's knowledge of what's really going on at the mainland, and people would like to see Taiwan do well economically as well. And we are doing our best, because after all, blood is thicker than water. We want to see the country reunited.

Taiwanese authorities say openly Taiwan is an independent nation, or a sovereign nation. In your view, is that a very dangerous statement for Taiwanese authorities to make?

It is a very dangerous statement, and I don't think that such kind of statement has the support of the overwhelming majority of the people in Taiwan. And the overwhelming majority of the people in Taiwan now have come to understand that precisely because of this kind of a statement and corresponding actions, they have caused instability across the Taiwan Strait and instability in Taiwan. And people have lots of complaints about this policy.

Can I ask you, then, why has there been a missile build-up on China's southern coast pointing towards Taiwan?

The kind of defensive measures that we take on the mainland are really for our national security and territorial entirety. If people look at the text of the three joint communiqués, [Editor's Note: see FRONTLINE's chronology] according to the August 17 communiqué, the United States has pledged to the Chinese side that it does not seek to carry out long-term policy of arms sales to Taiwan and its arms sales to Taiwan will not exceed the level of those in recent years since the establishment of diplomatic relations between China and the United States... and then the United States will reduce its arms sales to Taiwan over the period leading to a final resolution. So you can see that the United States has not really abided by its own pledge.

We have made very strong representation to the American side for these acts. We think that these acts should not have happened, and we think that the United States should stick to three joint communiqués. ... It will be in the interest of the United States, because ultimately, China is going to be reunited. It's the wish of the people, both in Taiwan and on the mainland. And after China's reunification, there will be bountiful new opportunities open for interaction between the American people and the people in Taiwan in addition to Americans' contact with the mainland, in terms of business and other exchanges. So I hope that the American side will really take a long-term point of view in tackling this issue and abide by its commitment.

There are a large number of people who are committed to closer economic links, the mini-links being set up. But what guarantees can you give to those Taiwanese people who feel that they do not want to join with the mainland again? Or, if they do join with the mainland, that they will not be precluded some of the freedoms they now enjoy in Taiwan?

... Because of the lack of contact over the years and because of the propaganda by Taiwan authorities, some people in Taiwan had many misconceptions about the mainland. But with this increased interaction among people from both sides of the Taiwan Strait, now I think there is increasingly more knowledge on the island about what's going on on the mainland.

And they know it's not like what some of the elements in the Taiwan authorities have described. They have seen the truth. Many people have come to the mainland over the years. About 20 million people visited the mainland by turnstile count. And I believe that now, more and more people think that the earlier the country gets reunited, the better off they will be.

As regards what kind of freedom they will have, I would like to talk a little about Hong Kong. Before China resumed its exercise of sovereignty over Hong Kong, people had all kinds of questions. You look what has happened since then, and really the people of Hong Kong are pleased with the kind of freedom they have. And we stick by our commitment of one country, two systems. Even many foreign governments, including Western governments, have said that China really carries out its commitment. Of course, the situation of Hong Kong and Taiwan are not entirely the same, so there will be even ... of all the content for one country, two systems, and they enjoy all kinds of freedom and you won't even see any troops there. And they will have the court of final adjudication as well.

[China specialist] Kurt Campbell says that, regarding China's position on Taiwan, if the status quo remains, that this is not sufficiently acceptable to the Chinese authorities. Is that an accurate representation?

We are talking about the reunification of China. When we are talking about discussions between the two sides, the resumption of talks, of course we are talking about several things. Firstly is that the recognition of the one-China principle is the prerequisite for dialogue between the two sides. And secondly, that this issue has to be solved, because people across the Taiwan Strait are all very eager to see the country reunified. This is a historical trend, and I don't think that anybody who goes against that trend can succeed.

Why was China so upset by the issue of the EP-3 spy plane incident?

I think the Chinese side has made very clear its position and the American side, of course, also made very clear its position. It is open knowledge, and of course, we think that China's principles stand. On the other hand, we adopt a forward-looking attitude. We think that China-American relationship should move forward in the interests of both sides. But China is a country which suffered a lot in the past. China country, like the United States, jealously guards its own sovereignty and territory, integrity and dignity. And if people understand these principles that they apply not only to the United States, but to China and to other countries, then they can understand the emotions of the Chinese people on this issue.

So you do not accept still the issue ... of culpability with regard to who hit who? Is there still a dispute in your mind between the U.S. and the Chinese point of view on this -- or maybe not dispute, but a conflict -- between the two points of view?

Yes, I think there is still a conflict of views. And we have pointed out there is the American spy plane that collided with the Chinese one. But we have also said that it's an accident. But we think that the United States should respect China's sovereignty, territory, integrity and dignity. And they should act with these thoughts in mind; then we can really avoid troubles of this kind.

We've been told that it was almost impossible for the Bush administration to contact your government in Beijing for a protracted period of time to clarify exactly what the situation was on the ground. Do you believe that's an accurate representation of the initial negotiations that went on at the time over the EP-3?

China did its best, and we stayed in touch with the American side.

How important are economic trade relationships with the United States?

I think this relationship is important for both sides. We're really in the same boat, because United States is the largest economy in the world and we do export a fair amount to the United States. So this market is important for us, and besides, we believe that the American business community and the American people are supportive of this relationship, because the China market is also important for the United States. And they get inexpensive labor there, but good quality products. So that's why there is continuous American investment in China. And United States has been exporting more to China. For instance, in the first half of this year, their export to China has increased by about 17.9 percent, and that's very good.

It is undoubtedly true that economic development in China has been enormous, rapid. But one of the things that has also occurred is a great disparity between rich and poor. Is there any sense in which Chinese authorities and the Chinese government fear instability as a result of the rapid growth in certain urban areas, as opposed to the quite slow growth or lack of growth in some rural areas? Could that lead to social instability?

In the last 20 years, China has been able to lift about 230 million people out of poverty -- almost the total population of the United States -- and China is still a developing country. So this is something unprecedented in the world. And if you believe that people vote from their pocketbook, you have to believe that the overwhelming majority of the Chinese people say that this government of China is being very effective in leading the country forward.

On the other hand, this is a country of continental size, and the circumstances surrounding economic development varies from place to place. The country cannot really move further economically in goosestep, so we have to let some areas develop first. On the other hand, we will try to make sure that the gap will not be too wide, so as not to create social instability.

This is a tough issue, because China is going to join the WTO. We face both opportunities and challenges of how to make our industry, agriculture and other branches of our economy more capable of coping with these challenges. It's a big issue. But I think we are on the right track. And I believe that the government's policy of restructuring our economy in a strategic sense of revamping the state-owned sector, of launching this develop the western power of China's strategy, are all to the good. And in the long run, we will be able to have closed the gap between the eastern and western powers of China, and we will see more even development in the future.

Can you see why there appears to the American viewer a contradiction between, on the one hand, engagement in WTO, and yet the continual clamping down and prevention of freedom of speech and freedom of the media in China?

This is a very interesting question. ... I believe that there is a misconception here in the West about what is going on in China in this information age. And that's why many Americans who have come away from China feeling that what they have seen in China is quite different from their pre-conceived ideas. So I'm really for more information exchange between the two sides. I would also hope that more Chinese programs will be shown on American TV, and so far we haven't seen much. In China, proportionally speaking, there are more programs from foreign countries.

One of the issues that Jiang Zemin addressed in his interview with the New York Times was his justification for the lack of political expression and the lack of freedom. He relates to the issue of social stability. Is that something that you see as a closely knitted relationship, that it is imperative for China to maintain social stability -- that that must be the paramount goal during economic development?

I don't think that the president makes a linkage between freedom of speech and the social stability in China. I believe that it has always been the Chinese government's position that freedom of speech is important, because through freedom of speech we can collect the wisdom of the people. On the other hand, social stability is important. When you look at China, China has been around for so many years, but it was only in the last 20 years or so that China opened up to the world. China accomplished a sustained economic development.

There was so much turbulence in the past. China was invaded by other countries. China was torn apart by the warlords in China in civil wars, and then foreign aggression again, and so on and so forth. So that's why the Chinese people treasure stability, because without stability there cannot be national cohesion; there cannot be fast economic development. There cannot be improvement of people's living standards and there cannot be peace of mind. And I think that recent developments in the world have shown people how important stability is.

Can you explain to the U.S. audience why is it that the Communist Party is the only party that can exist within China? And a supplementary question to that is, is this a Communist Party? Is this a party of the people any longer?

The Chinese Communist Party is the party which has contributed a lot to the nation's liberation, through the reach of the nation of China. On the other hand, there are other parties, democratic parties, about eight of them, who all participate in the administration of state affairs. And we think that this political consultative system is a very good one. The people need to understand that China wants to develop itself, and we have a party which serves the interests of the people as I've told you -- the record shows that. So why should one change something which is good? Good for the people.

...According to the reports from last week when Foreign Minister Tang came to Washington, he sought a clarification of "the three no's" that were discussed between Jiang Zemin and Clinton from last year: no to Taiwan independence, no to one China/one Taiwan, no to Taiwan joining global bodies. Were those issues discussed last week when the foreign minister was in Washington?

I'm sorry, I cannot go into the details of the discussions. But let me say that the three no's that you have talked about were actually already in the three joint communiqués, because the three joint communiqués laid out the foundation of our relationship, specifically on the Taiwan issue. It's all there.

On the other hand, I would like to point out what I would like to hope to see coming out of the struggle against the terrorism, is that there will be a clear understanding of one's country's national interests, of the need of the international cooperation in dealing with some of the worst issues, like terrorism, in the world. So I do believe that a strong, stable and healthy relationship between China and the United States is in the fundamental interests of our two peoples, and it contributes to peace, stability and prosperity in the Asian Pacific region and in the world as a whole.

China and the United States have been cooperating in the Asia and Pacific region Look at what the two countries have done. We work together, helping to pull East Asia out of the economic crisis and we are consulting each other again. And we have had very close exchanges of views about certain regions' stability. So we think that it is good for us to work together, and we welcome an even more constructive and positive and important role by the United States in the Asia Pacific region.

But in Congress, as we know, there are people who see the China threat. That mindset exists within the Pentagon ... and it exists within certain senators. How do you deal with that mindset that still exists within certain parts of the U.S. administration?

I would like to, in summary, point out some basic facts. First is that the Chinese economic system is dynamic. According to IMF, China will be able to maintain this 7 percent to 8 percent growth rate in quite a few years to come. Second, the Chinese people are living much better, and they support the government's policy, both the foreign policy and the domestic policy. Third, you have a very effective leadership in China, dedicated to the people and to the interests of mankind. Fourth, you look at China's neighbors. Our neighbors all like to develop their relations with China. And people want to see any problem between China and United States ... actually when there were problems in the first half of the year, some of their leaders came to this country to urge the American leaders to have better relations with China. And fifth, China's policy is to develop good relations with the United States to cooperate on issues which touch on peace, prosperity, stability in the world, and in the Asian Pacific region.

So I think we are in a new era. People should have a new concept, and I believe that the American people know even better now where the real threats come from.