Not funny, according to the Chinese. “In the West, the Santa Claus hat is a happy symbol,” wrote a Chinese military magazine in a recent article describing the incident, “but it seems arrogant for pilots wearing such hats to hover near another country’s airspace.” The pilot who flew up to confront the spying American Santas that day was Wang Wei. The article described how Wang and his wingman used “combat actions” to “force away” the American plane. In China, the veteran Wang, 33, was seen as a heroic defender of the motherland. In truth, he could be a bit of a joker himself. An American air crew once photographed Wang winging by holding up a sign advertising his e-mail address. A showboat in the fighter-jock tradition, Wang Wei liked to fly underneath the ponderous American EP-3Es–then suddenly pop up just ahead. The maneuver, first perfected by Soviet pilots during the cold war, is called “thumping,” because it rocks the slower plane in the jet’s wake and jolts its crew. Wang thumped hard. He once reportedly left scorch marks from his afterburner on the windshield of an American spy plane.

When Wang Wei flew out to intercept Lieutenant Osborn’s EP-3E on the morning of Sunday, April 1, as the American reconnaissance plane neared the headquarters of China’s South Sea Fleet in the port of Zhanjiang, the two pilots–and their two nations–collided. Exactly what happened is the subject of a dispute that could badly strain the already rocky relations between the world’s sole superpower and the Asian giant. Wang’s wingman, Zhao Yu, later claimed that the American pilot sharply banked his plane to the left, striking the tail of Wang’s fighter. In the version put out last week by the Pentagon, the EP-3E pilot was flying straight and true when Wang played his favorite trick. As it flew beneath the EP-3E, the Chinese jet disrupted the airflow across the wing of the American plane, causing it to dip and clip Wang’s tail. The Chinese fighter spun out of control and crashed. Though there were reports that Wang bailed out, he was apparently lost at sea. Missing its nose cone, with two of its propellers damaged, the EP-3E plunged 8,000 feet before Lieutenant Osborn was able to regain control. As his crew, wielding pickaxes, desperately tried to destroy the EP-3E’s highly sensitive surveillance equipment and software, Osborn flew his wounded plane to the nearest airfield–which happened to be Wang’s air base on Hainan Island, just off the China coast. Osborn made a hairy, high-speed landing, without trying to use his damaged flaps. The plane and its crew were immediately surrounded by Chinese soldiers wielding guns.

It seems likely that the 21 men and three women aboard the EP-3E will sooner or later be allowed to come home. But if the plane is returned it will be minus some of its high-tech gear. The negotiations were marked all the way by haggling over face-saving details. At the outset of the crisis last week, the posturing between China and the United States mirrored the midair crash between Osborn and Wang: an unnerving display of bravado, misunderstanding and dangerous miscalculation. The attitudes displayed by the leaders of the two nations were worlds apart. President George W. Bush at first tried to show an unruffled coolness in his first test as commander in chief, but succeeded largely in demonstrating ignorance of his adversary. The Beijing regime exhibited massive and easily wounded pride. Its public face was angry and resolute–but in truth the Chinese may have been just confused and divided. A reconstruction of the opening days of the crisis suggests that each side needs to learn much from the other–or risky gamesmanship in the skies and in the distant capitals could spell more trouble down the road for a complex relationship.

During the presidential campaign, and in his early foreign-policy pronouncements, George W. Bush made clear that he would be more of a cold-eyed “realist” and less of a meddling do-gooder than former president Clinton. In the case of China, at least, Bush may have overcorrected. He seems not so much detached as indifferent. Among his main foreign-policy advisers there are no old China hands. The middle and lower ranks, as yet only partially filled, include no notable Sinologists. “They don’t want panda-huggers,” said one Republican China expert. Bush has tried to learn from his father’s experience, and George H.W.’s experience in China was mostly unfortunate. He was roundly criticized for trying to defend Chinese leaders after the 1989 Tiananmen Square massacre.

Rather than pursue Clinton’s goal of “strategic partnership” with the Chinese, Bush announced that he would treat China as a “strategic competitor.” Aside from some vague cold-war echoes, it isn’t quite clear what that means–possibly, not even to Bush himself. Bush didn’t seem to be trying all that hard to strengthen or explore relations with Beijing in his first days in office. While he called numerous world leaders from nations large and small, he did not place a call to Chinese President Jiang Zemin. To the Chinese, ever conscious of face, Bush’s unconcern amounted to a rebuff. It did not go unnoticed in Beijing that President Bush went to great lengths to orchestrate a visit by Japanese Prime Minister Yushio Mori, even though Mori was about to resign.

Bush seemed relatively unfazed when he first learned that 24 U.S. airmen and their damaged spy plane were in Chinese custody at about 9:15 on Saturday night, March 31 (Washington is 12 hours behind Beijing). The president and First Lady were entertaining Bush’s old Yale buddy Roland Betts and his wife for the weekend at Camp David. National-security adviser Condoleezza Rice was also a guest that night. Rice put out a few calls to rouse the national-security bureaucracy, but according to a source who was present at Camp David, neither Bush nor Rice seemed anxious about the situation’s deteriorating into a hostage crisis. There was some discussion of using the White House “hot line” initiated by Bill Clinton to call Beijing directly, but Bush and his aides thought such a call would be premature. Bush went to bed around his usual time, before midnight. White House aides reassured reporters that the incident would be treated as an accident and resolved within 24 hours or so.

The American assumption was wrong. In China, as news of the collision spread, the regime feared an outburst of anti-American hysteria. In an attempt to distract attention from the failings of communist ideology, Beijing’s leaders have fomented fierce nationalism in recent years. When an American warplane mistakenly bombed the Chinese Embassy in Belgrade during the Kosovo war two years ago, the Chinese government bused in demonstrators to stone the American Embassy. But the rioting got out of control, a scary sight to rulers who remember the Democracy movement they crushed at Tiananmen Square. Now, with growing resentment of America’s latest “barbarous outrage,” Beijing worried that the mob might again get the upper hand. In Beijing, extra police personnel quashed minor protest efforts. On the Chinese Internet, government Web masters kept a tight lid on any Web chat that might provoke angry demonstrations. In one chat room, a posting falsely declaring that 100,000 students from 10 universities were marching on the American Embassy kept popping up–and kept getting deleted by vigilant Web masters. Still, Chinese cyberspace dripped with anti-American vitriol: “We should kill some U.S. soldiers to teach the invaders a lesson,” opined one chatter. Said another: “Are you ready? This is war.”

Some Chinese leaders, especially those in the People’s Liberation Army, were eager to fan the flames. Recently cut off from some of its sources of corruption, like an active trade in pirated video discs, the PLA needs new sources of revenue. A military crisis with the West might help boost their budgets and prestige. For the military hard-liners, the midair collision with an American spy plane and loss of a brave Chinese pilot was a chance to cry “Remember Belgrade!” Chinese sometimes xenophobic press added fuel with photos of the banged-up EP-3E and the headline proof of bullying. Other Chinese leaders feared that they would be blamed if the Americans got away with spying on the Chinese and the crew of the EP-3E was too quickly released.

Divided, further riled by the demands of the commander of the U.S. Pacific Fleet, Adm. Dennis Blair, that the Chinese not set foot in the grounded airplane, Beijing’s leadership essentially went silent.

American officials had trouble rousing any response from the Chinese on the first Sunday after the accident. In Beijing, Ambassador Joseph W. Prueher had trouble reaching someone of authority. An old fighter pilot, retired Navy Admiral Prueher is no Sinologist, though he does have some experience getting nowhere with Chinese officials. When the Chinese rattled their sabers by firing missiles toward Taiwan in 1996, Admiral Prueher, then commander of U.S. forces in the Pacific, complained, “I don’t know anybody in China to talk to.” In Washington, Secretary of State Colin Powell wasn’t having much better luck. He tried to reach Qian Qichen, the deputy minister who handles foreign policy. But the Beijing official would not come to the phone. On Hainan, the crew was held incommunicado, and U.S. satellite photos showed the Chinese removing equipment from the airplane as it sat on the runway.

Still, in the White House, it was mostly business as usual. Bush came back from Camp David early on Sunday, not because of the crisis, but because bad weather interfered with his outdoor recreation. On Monday, White House spokesman Ari Fleischer kept a long-scheduled day off to attend the Yankees’ home opener. “We cannot let this escalate,” Bush told his advisers, as he groped for some way to get Beijing’s attention. Bush finally made his first public statement on the incident, but he seemed more irked and puzzled than either firm or conciliatory. The president said that he was “troubled” by the Chinese government’s inaction. He demanded American access to the crew and the return of the plane “without any further tampering.”

That night, an American military man, Brig. Gen. Neal Sealock, was permitted to see the crew of the EP-3E–but only for 40 minutes, and not alone. By this time, White House aides say, Bush had begun to worry about “our people,” as he called the airmen and cryptologists detained on Hainan, and about the reaction of their families back home. The president insisted on speaking personally to Sealock to get a rundown on the crew’s well-being. He was also hearing the angry rumblings from anti-communist hard-liners on Capitol Hill who were beginning to grumble about “hostages” and demanding action. What action wasn’t quite clear, but there are plenty of opportunities ahead to tweak or punish Beijing. The administration is supposed to decide in a few weeks whether to grant Taiwan’s request to buy a small arsenal of new weaponry, including Aegis antimissile defenses. Beijing is trying to finalize its entry into the World Trade Organization and badly wants to sponsor the 2008 Summer Olympics. On Tuesday afternoon, the president stepped into the Rose Garden and tried to ratchet up some pressure on Beijing. “We have allowed the Chinese government time to do the right thing,” he said, squinting a bit and looking stern. “But now it is time for our servicemen and women to come home.”

The administration seemed to be treating the episode as the sort of espionage flap that occurred from time to time during the cold war. With the Kremlin, it was simply understood: we spy on them, they spy on us. If someone got caught, there were ritual protests, a few diplomat/spies would be booted out, and it was back to business as usual. But it seems to have only slowly dawned on the Bush administration that these are different times, and that the Chinese see things differently. Still smarting over colonialist bullying after several millenniums as “the Middle Kingdom,” the center of the universe, the Chinese deeply resent any intrusion on their borders. Indeed, many Chinese claim that the collision did not occur over international waters–80 miles from the Chinese coastline–but rather in their “territory,” which they define as anywhere up to 200 miles from their coasts.

If the administration had any doubts about China’s resentment and balkiness, it lost them when Chinese President Jiang Zemin was finally heard from on Tuesday night. Beijing’s top man insisted the United States must “bear full responsibility” for the collision. He demanded an apology and called on Bush to halt all spy flights off the Chinese coast.

The Chinese president’s statement was a wake-up call. Bush’s team finally turned to the issue that should have commanded its attention from the first: how to allow the Chinese to save face, with-out appearing to openly kowtow. In a phone call with Condi Rice on Tuesday morning, Secretary of State Powell had actually raised the idea of formally expressing “regret” for the incident, but his suggestion had gone nowhere. Later on Tuesday, while flying back from a meeting in Florida, Powell himself had said to reporters, “I regret” the death of the Chinese pilot, but his remark had been treated like an aside, a throwaway, and no one paid much attention. Besides, the secretary seemed to be speaking for himself, not the president. And Powell that same day had declared that the United States “has nothing to apologize for.”

It was becoming apparent to Bush that low-key finger-wagging was not going to bring home Lieutenant Osborn and his crewmates. Though the president had done his best to seem nonchalant and cheerful in public, teasing reporters and making self-deprecating jokes in his usual way, he was said to be tetchy in private and he was beginning to complain about losing sleep. Though Bush never goes to bed late if he can help it, his phone calls with Rice started at 5:30 a.m. Dissatisfied with the advice he was getting from his own team, he began reaching out to his father’s old friends. Bush may not make the calls directly, preferring to use go-betweens. But one top aide says that Bush has at times picked up the phone himself. According to an informed source, the White House began calling George H.W. Bush’s national-security adviser, Brent Scowcroft, and his secretary of State, James A. Baker. This source says the White House also consulted with Henry Kissinger, Nixon’s former secretary of State who launched the first opening to China in the 1970s and now advises major corporations that do business in China. It is almost certain that Bush talked to another old China hand–his father–but at the president’s explicit direction White House aides refused to touch the subject.

Finally, the diplomatic wheels began to turn. On Wednesday morning, at his 8:15 a.m. meeting with top advisers, President Bush looked around and asked, “Is there a way out?” He meant for the Chinese, but it was clearly time to start showing some contrition. Within a couple of hours, Powell appeared before reporters and explicitly stated, “We regret that the Chinese plane did not get down safely, and we regret the loss of life of the Chinese pilot.” Just as important, Powell’s top aide and close friend, Richard Armitage, had begun talking to Chinese officials about a letter that might unlock the impasse. A former Navy SEAL and Vietnam combat vet, the burly Armitage comes across as a tough guy, but he is also an experienced negotiator and fixer. That afternoon, Armitage delivered a secret letter to the Chinese, exploring ways to back down from the crisis. Among them: reviving an obscure and largely moribund U.S.-China commission, established two years ago to look into ways to minimize tensions and avoid maritime accidents, to investigate the incident. Powell was clearly taking the lead in trying to resolve the crisis. Donald Rumsfeld, Bush’s hawkish secretary of Defense, stayed largely mum, in part to avoid provoking China’s edgy military into a bellicose response. At 10:15 p.m., Powell called Bush to brief him on the diplomatic moves, and at 2:30 a.m. Powell was awakened to handle developments in China, where it was midafternoon, Thursday. Then on Thursday afternoon Washington time, the president added his own voice: in a speech to newspaper editors, he voiced his own “regret” over the loss of the Chinese pilot and sent his “prayers” to the downed pilot’s family. (A White House spokesman said that Bush’s remark was not planned in advance.)

According to a high administration official, the Bush team is also using private back channels to communicate with the Chinese leadership. A diplomatic source said Kissinger told a Chinese official on Thursday that his personal opinion was China should release the crew members no later than the weekend or risk turning American public opinion against Beijing.

By Thursday night the logjam was beginning to break. General Sealock was permitted to visit the EP-3E crew again, this time alone. He reported that the Americans were in reasonably good spirits and well cared for, housed in Chinese officers’ quarters. A Chinese Foreign Ministry spokesman said that the American high-level expressions of regret were “a step in the right direction.” Even so, the spokesman continued to insist that the United States make a full apology. Just how Washington can make an apology that will satisfy Beijing–yet not appear to grovel–may be a tricky business. Washington wants a speedy resolution. But Beijing, which does nothing quickly, may try to draw out the endgame. Apologizing in China is as complex as it is important. The method, manner, and rank and identity of the person doing the apologizing all matter in ways that are difficult for Westerners to grasp. In Beijing, at least one commercial organization offers apologists-for-hire. To avoid too much loss of face, you can pay to have a stranger say sorry to someone you wish to apologize to. There are ancient Chinese protocols “rooted in rites and rituals that most people have forgotten,” says a former U.S. military attache who served in Beijing. “Some Chinese have one foot in the 21st century and the other in the Ming dynasty.” If and when the two sides reach a final accord, look for fudge words in the agreement. In Chinese, there are different words for “I’m sorry” and “I apologize.” But the English words “I’m sorry” can be translated into either. So, in theory at least, the English-language text could say “we’re sorry,” while the Chinese translation would suggest “we apologize.” By such nuances are diplomatic roadblocks overcome.

The Chinese could stall the release of the EP-3E crew just to show who’s in charge. The Chinese may also want to hold a funeral for the lost pilot before they let go of the Americans. On Friday, Beijing was still trying to score PR points with the pilot’s widow, Ruan Guoqin, who was shown on TV, grief-stricken as she languished in a hospital bed. The official Xinhua News Agency released the text of her letter to President Bush: “You are too cowardly to voice an ‘apology’ and have been trying to shirk your responsibility repeatedly and defame my husband groundlessly,” the letter scolded. Beijing will want some high-level official to come over and express sorrow. The Chinese would prefer Powell, but they may get Prueher, who can afford a greater display of remorse. Last Friday, major Chinese newspapers showed a photograph of the American president, whom the Chinese press sometimes refer to as “Little Bush,” pursing his lips, eyes downcast. This may be the Chinese propaganda machine’s attempt to squeeze a show of humility out of an ambiguous image. The closer any American official, especially Bush, comes to a kowtow (in imperial times, dropping to the floor before the emperor and banging one’s forehead nine times), the more satisfied the Chinese citizenry will be. Beijing is paying close attention to the public mood. Washington is sometimes baffled by mixed signals from the Chinese because it is difficult to separate public posturing from the more reasonable line often taken in private diplomacy. At times, the rulers actively seek to inflame the public. Late Saturday, there were rumors that the regime, in a reversal of its earlier caution, would permit protests against the American Embassy.

That would just further prolong the standoff. Beyond the loss of the pilot and the loss of face for either side, the long-term costs of the incident are hard to know. Depending on how it plays out, the flap could give a boost to hard-liners both in America and in China. The Pentagon believes that the crew of the EP-3E was able to destroy about 80 percent of the intelligence value of the plane. Ever since the American spy ship, the Pueblo, was seized by the North Koreans in 1968 as the crew tried to smash its surveillance equipment with axes and sledgehammers, American spy crews have followed careful procedures for getting rid of the evidence. In the 25 minutes it took to fly the damaged EP-3E to Hainan, the crew probably had enough time to erase or destroy software programs that would tell the Chinese much about U.S. capacity to intercept their signals and break their codes. Still, the Chinese can examine the plane’s antennas and take apart the sophisticated computers onboard. While American officials praised Lieutenant Osborn for safely landing a battered plane, some old combat vets in the Pentagon grumbled that the young pilot may have panicked as the plane plummeted after the collision. These officials claim that Osborn could have nursed the EP-3E along to Da Nang air base in Vietnam, some 200 miles beyond Hainan. The Vietnamese, these Pentagon officials point out, never would have turned over the plane to the Chinese, whom they have hated for centuries.

Such mutterings are likely to be forgotten if Osborn and his crewmates are returned home, no doubt to a heroes’ welcome. President Bush will need to protect his own political flank by turning defeat into victory. The right-wingers are already complaining. An editorial in the widely read conservative magazine The Weekly Standard is titled “A National Humiliation.” The authors, Robert Kagan and William Kristol, both prominent hard-line voices, argue that Bush has shown “weakness” in his approach.

That may be too harsh, but Bush may need to be more hands-on when it comes to managing an uneasy relationship with Beijing. The cold war may be over, but another kind of long twilight struggle has begun. Because of different values and customs–and the sheer orneriness of an aging leadership that may feel its legitimacy crumbling–China will always be hard to handle for an American president. Small confrontations are sure to pop up. The trick will be to head them off before they can become major crises.