By David E. Sanger

WASHINGTON -- The imagery China chose to send around the world as it celebrated the 50th anniversary of the People's Republic on Friday seemed a throwback to Communism's brighter days: Half a million troops and citizens on parade, endless columns of missiles and armor, fighters and bombers screaming overhead. It was enough to make an old China hand like John Paton Davies, now 91, wonder whether the ever-emotional dynamic between the United States and China was headed into "another era in which we fear the Dragon."

The days when Mr. Davies and his State Department colleagues were purged in the peculiar madness of the McCarthy era for arguing that the Chinese Communists would be around for a while seem as remote today as pre-revolutionary Beijing. But the underlying fear that rattled the country in those years -- later to take the form of oscillating uncertainty about how to think about China and the kinds of threats it might pose -- has really never lifted.

"It was a mystery to me back in 1952," Mr. Davies said, his voice now whispery. "And it is still a mystery to me today. Our infatuation with China -- whether it is a potential enemy or a dear friend to be protected and indulged -- hasn't changed all that much."

Americans like to think they have a far clearer, more balanced view of China today than they did when Washington was seized with the question of who lost it, as if it was in America's power to win or lose. But ask the old China hands, and they will tell you that the pendulum of public opinion about China swings as vigorously as ever.

Tales of nuclear spies, and threats that China, if pushed, would resort to force to prevent Taiwanese independence rekindle wariness of a fearsome power whose real intentions seem forever cloaked.

But opposite images of a New China also spilled across the screen last week: jammed Internet cafes in Beijing, screaming stock traders in Shanghai, the cell-phone middle class in Guangdong taking the kids to soccer. Stitched together, those paint a comforting mosaic: a Chinese people that has -- finally -- become more and more like Americans.

Both images, of course, carry more than a little truth, and suffer from more than a little exaggeration. But they are also the yin and yang driving Washington's "engagement" policy -- usually driving it in circles.

If you ask the old China hands --- men like Mr. Davies who traveled the Chinese countryside as Mao battled the Nationalists -- the popular imagery Americans have of China has almost always been out of sync with the reality.

The enormous fear that China and the old Soviet Union would team up against America masked a bitter split between the two. Yet it seized Washington until the two countries actually began firing on each other in the 1960's. Then, in 1972, the exuberance around President Richard M. Nixon's visit largely ignored the death and terror of the Cultural Revolution.

And the rush to invest in China's booming economic growth in the '90's masked the depths of its economic troubles -- the billions in bad loans, the wildly inefficient state-owned industries, the tens of millions of unemployed.

"We've so often deceived ourselves," said Culver Gleysteen, who grew up as the son of missionaries in Beijing and who, on Oct. 1, 1949, was among the few American diplomats left in China -- Vice Consul in the port of Dalian. Talking from his home in Boothbay, Me., Mr. Gleysteen said that in the years just after China changed hands "everyone in the State Department knew Chiang Kai-shek was a loser and we had to think about dealing with the Communists."

But Mr. Gleysteen recalls that his questions about engaging Mao prompted Walter J. Robertson, the Under Secretary of State for Asian affairs, to ask, "Is that young man Red?"

These days the arguments about how to deal with China are only occasionally tinged with questions of loyalty. But America's allies still worry about the periodic swings of views about China.

"I think it comes from the fact that the U.S. is so idealistic," said Kunihiko Saito, who has just ended a stint as Japan's Ambassador here. "So you become far more disappointed than we Japanese do when China does not act according to American standards."

It is possible that America is finally shedding some of its illusions. The companies that poured investment into China are pulling back, recognizing that the market that they thought would be the way to near-instant riches will, in fact, be a long slog. The think-tanks are consumed by a debate over two very different China threats: The China that gradually builds up its now small arsenal of intercontinental ballistic missiles or the China that risks an economic implosion that could set off the next Asian crisis. For every article about whether China will try to retake Taiwan there is another asking whether it will be the next Indonesia.

"There are, of course, people who fear a resurgent China, and China itself still fuels those fears," said Robert Suettinger, who spent his career China-watching at the Central Intelligence Agency. "But sort of backwards and by mistake we are moving toward a more realistic view, one that can avoid the ups and downs. We have to learn to live with great powers that are not our friend, but not our enemy either."