To the first-time visitor, China is a country of fascinating and, at times, maddening contrasts and contradictions.

There is, of course, the stark contrast between the mean life of the countryside and industrial cities and the genuinely cosmopolitan prosperity of cities such as Beijing, with its modern glass and marble office towers, its dramatic new airport and efficient subway, and its glitzy hotels and shopping malls.

And there is the delicious irony of a country run by a cabal of aging socialists in black suits who live, work and rule on behalf of the masses from an enclosed and secretive compound no different from the old imperial Forbidden City next door.

There is the generation of up-and-coming young Chinese officials who are so sharp and sophisticated you almost believe them when they say there is no such thing as a party line -- until the fourth or fifth one makes almost the same point using the same statistic or analogy or historical reference.

And there is the confounding contradiction of an economy that, in most ways, now looks and feels and acts like a market economy, except when it doesn't or the government decides it shouldn't.

If this were indeed just a market economy, then one would be hard-pressed to disagree with the assessment made at a conference here this week by Jeffrey Garten, the dean of Yale's business school, who predicted that China would be hit with a major financial crisis within the next five years. With nonperforming loans at Chinese banks now equal to half of the country's annual output, its currency misaligned, its economy addicted to vast and ever-growing inflows of foreign capital and outflows of finished goods, this has all the markings of a bubble economy.

And yet it is precisely because this isn't really a market economy that there is some hope that the heavy-handed "administrative measures" taken by the government might actually succeed in recapitalizing the banking system, restructuring money-losing state-owned enterprises and engineering a "soft landing" for the overheated economy.

For Americans trying to set the terms of engagement with this vast and resurgent economy, there is another, more maddening contradiction in the Chinese character that is at the root of our uneasy relationship.

There is the practical, hard-nosed, problem-solving China that acknowledges its strengths and its weaknesses, makes clever use of ambiguity and brings a long-term, strategic view to working out short-term disagreements.

This is the China that has learned well the lessons of the last Asian economic crisis and now insists on having strong institutions in place before it fully opens its economy and deregulates its financial system.

It is the China whose officials made clear this week that they are open to managing and limiting the growth in textile exports to the United States after the expiration of quotas later this year.

And it is the China that is offering to reduce its massive trade surplus with the United States by purchasing all manner of high-tech capital equipment, if the United States would only ease Cold War-era restrictions on technology transfers.

But contrasted to this is the China that demands access to the most advanced U.S. technology before it has demonstrated the will, or the ability, to ensure that it is not stolen and copied.

It is the China that insists on managing its difficult economic transitions but seems unwilling to have other countries manage theirs.

It is the China that wants all the respect that comes with being a superpower, along with the concessions accorded a poor, developing country.

And it is the China that is quick to see in every clash of interests or critical comment a proof of some long-term U.S. strategy to keep China from taking its rightful place as a leading political, military and economic power.

The Chinese are absolutely right when they chastise Americans for misperceiving their country as a monolithic society with an all-powerful government that threatens our prosperity. The problem is, they misperceive us in just the same way. Until we untie that perceptual knot, the economic relationship will continue to be tense.