At first, as you listen to this recent arrival from China, you think, well, he has lost, and the Communist regime has won another round. Another brave dissident paroled directly from prison to an exile of irrelevance while his many lesser-known comrades languish in jail -- and while everyone who matters, from President Bush on down, acquiesces.

In the sweep of history, too, this frail advocate of democracy, his teeth a ruin from years of eating only prison gruel, seems at first to be on the losing side. Without any concession to democracy or human rights, the dictators in China seem to be prospering. Their economy booms while much of the world stagnates. They gradually squeeze Hong Kong's freedoms, to scant outside complaint. They are wooed and flattered by American business executives and think-tank moguls. They have lured the Olympics to Beijing.

Yet the longer you listen to this man -- gentle, moderate, rational, remarkably free of bitterness -- the more you begin to wonder: If the dictators have everything so neatly controlled, why are they so afraid of Xu Wenli? And who is really on the losing side?

His story is beyond remarkable. He first went to prison in 1981, after posting a message on the briefly tolerated Democracy Wall and publishing an underground journal. For that, and for supporting peaceful reform, he spent much of the next 12 years in solitary confinement. His daughter, Xu Jin, grew up without a father; his wife, He Xintong, spent more time in the company of security goons than with her husband.

Yet after his release he began speaking out again. Despite his own trepidation about pushing too hard, he joined with younger colleagues in forming the China Democracy Party, because they insisted and because he felt his international renown might offer them some protection. As he expected, he went back to jail, in November 1998; so, eventually, did most of them.

Now, at 59, he finds himself in a new world, having spent 16 of the past 21 years in prison. His daughter, by now a poised young woman, interprets the English he does not yet understand and helps him navigate the strangeness. But he seems amazingly unsurprised by what he finds, comfortable in his new Brooks Brothers shirt, unassuming but not overly impressed as he makes the Washington rounds from State Department to White House to Capitol Hill. An inner compass that has held steady during a quarter-century of resistance to totalitarian rule is not going to be jarred by this latest dislocation.

And his message is, as it has always been, restrained. It is too soon to judge China's new leader, Hu Jintao, he says. The West should neither pressure him too forcefully nor praise him with such flattery that his position, if he proves to be a reformer, might be compromised at home.

China "is still an emperor's country, and this is not good." But it is changing faster than its leaders can control, and the economic reforms will inexorably propel demand for political freedoms. Owning their own homes will give people an incentive to resist arbitrary power, he suggests. Paying taxes will (he cites approvingly the slogan on the District of Columbia's license plates) encourage ordinary people to seek democratic representation.

"I think change has to be step by step, gradual," he says. "Violent change is not going to work for China." Despite his age, he says, "I don't want to hurry political reform. I don't want to be selfish as a dissident."

His tone as he discusses China's leaders is sorrowful but almost understanding -- so different from their attitude toward him that it is almost breathtaking. It makes you wonder, again, why they are so afraid. Why, as they released Xu, did they arrest a half-dozen others for signing a petition on behalf of political prisoners? Why, as Xu reminds anyone who will listen, do they keep locked up his Democracy Party colleagues Wang Youcai and Qin Yongmin and so many others, known and unknown in the West?

The answer, most likely, is that they do not feel secure at all. The rising corruption; the 100 million or more roving unemployed; the huge inequalities between city and country, between coast and hinterland; the massive debts of state-owned enterprises, and the rising anger there of cheated workers -- these problems loom over the leaders and leave them feeling threatened by the slightest sign of political resistance.

But the brittleness in facing such threats stems in part from the absence of any institutions to channel public opinion or mediate state power -- from the absence of the kind of civil society that Xu and his comrades might have helped create. And so in the end you think that the real loser in this story is not Xu but China; that what is saddest in all this is not his exile, not even his family's lost years, but the loss to his country of what he and his fellow democrats might have contributed.