Long before the 1997 Hong Kong handover caused an understandable exodus of the former British colony's finest directorial talents - John Woo and Ringo Lam among them - another South-east Asian had long since proved himself adept at both Mandarin and English-language productions, and staked out a position as one of the most respected directors on the globe.

The Taiwanese-born Ang Lee first came to Western prominence in 1993 with the bi-lingual The Wedding Banquet, a strangely delicate screwball comedy which became the first Taiwanese film ever nominated for an Oscar. Having proven his mastery of subtlety in Taiwanese family comedies, Lee went on to tackle domesticity of an entirely different kind with the Hugh Grant/Emma Thompson period-piece Sense & Sensibility. Though the film was unmercifully butchered in hotpress at the time by a film critic who was on his third day in the job, very unused to period/costume drama, and couldn't quite believe his eyes (yes, I was that butcher - C.F.), time has shown the film in a more favourable light, and it is certainly the most accurately Austen-esque of the never-ending stream of Jane Austen adaptations that followed it.

Lee cemented his reputation in 1997 with the immaculateThe Ice Storm, a simultaneously witty and tragic dissection of 1973 middle-class-liberal America, replete with much in the way of Nixon-bashing, and so rich in period detail that it even included a wife-swap.

Arguably, 1999's Ride With the Devil could be considered a blot on his CV: a revisionist and politically confused American Civil War epic-Western, its tone was far too ponderous and one-paced for the hair-raising nature of the material, and a potential classic ended up sinking without trace.

The impossibly magnificent Crouching Tiger, Hidden Dragon more than marks a return to form: unarguably a genuine masterpiece which will live and live through decades, it has been selling out tickets at lightning-speed at the IFC, and has now gained a general nationwide release, to the greater benefit of all humankind. Adapted from a marathon four-volume novel written by one Wang Du Lu - but clocking in at a just-perfect 120 minutes - Lee's direction of Tiger wisely narrows the novel's focus down in order to concentrate on two diametrically opposed couples: the hot-headed and irrepressible Jen and Lo, whose fireworks are counterpointed by the stoical wisdom of Li Mu Bai (long-time HK combat-ace Chow Yun Fat) and Shu Lien (escaped Bond-girl Michelle Yeoh).

The resulting film - the first wuxia pian (heroic bloodshed) offering to attain blanket general release in the West - is as lyrical, haunting, poetic and visually mesmerising a spectacle as cinema has ever witnessed. We would advise you to watch it.

The critics have dubbed Crouching Tiger, Hidden Dragon a 'martial art-house' film. Is Lee as dubious about such a label as we are?

"Well yes, because it is only hitting the art-houses here to begin with. I have to deliver this movie as a block-buster in China this summer. I have before now, been able to show, in a sense, that I despise commercial filmaking.

"This time it's almost the opposite - martial arts has always been one of the main forms of entertainment in Chinese society, both in pulp literature and the movies, it's the main genre, and we used this pop genre almost as a kind of research instrument to explore the legacy of classical Chinese culture.

So this isn't highbrow or lowbrow, and that was a challenge. But it was cool to be able to do it - to mix your boyhood and adulthood together - a romantic impulse to go back to China, or rather a dream of China that probably never existed, and create this unreal, fantastic scenario and make a picture that's fuelled by the martial arts movies I grew up with and by the romantic novels I used to read instead of doing my homework".

Had the director always been itching to do a wuxia film?

"Because I grew up with it, I always had fantasies about the things I wanted to try to do. It's a fictional world. It has laws of its own and a very interesting cinematic language as well. It's a fascinating world, where anything can happen, where people can fly. There's part of me that feels, unless you make a martial arts film, you are not a real film-maker. It's a pure cinema energy - it's raw, it's cool, it's fun. It's why you want to be a film-maker. But people tend to look down on the genre as cheesy. Some may have thought it was strange that I could just drop what I normally do and make something like a B-movie.

And as I was doing it, there was no escape, I had to bring in drama, I had to bring in women. Women do a lot of the things that men do in this genre. They embrace the Tao, they take the duels. The women are gutsy and they make decisions, one way or another. I had to bring in beauty and whatever I feel added quality to it. It became an Ang Lee movie".

Would this explain why he described Crouching Tiger in his pitch to prospective backers as Sense And Sensibility with martial arts?

"I think, at the core, they're a lot alike.They just look very different in cinematic terms.But in Crouching Tiger there is 'sensibility' - a passionate, romantic force. It's a personal freedom that can be destructive when you go overboard. On the other hand there is "sense" - restraint, social obligation, repression. My films always seem to be about how these conflicts resolve themselves.So when I was thinking about the Wuxia, a warrior class during the time of Confucius, free-thinking martial arts figures like Knight Errants, without a job, without loyalty to the government, rebellious, free in spirit, just in heart. They seemed to afford my preoccupations!

"Though the film is not crafted in realistic style as my earlier films have been, the emotions it conveys are real. So you will see that the drama is itself choreographed as a kind of martial art, where the fighting is never just kicking and punching, but also a way for the character to express their unique feelings and situations. I want to use the language of the genre to tell something that's internal and I had an idea of the tiger and the dragon; the tiger out in the desert, out in the open,while the dragon is hidden - it's hidden desire and everything that's taboo. I'm making a wuxia film, but I'm really dealing with the hidden dragon".

Why did he decide on using the esoteric Wudan style of martial arts rather than the Shaolin variety made popular in the West through Jackie Chan and Bruce Lee?

"Shaolin is more violent, more about external strength. The traditional division for martial arts is Wudan for inner strength and Shaolin for outer strength. The internal strength, which in essence is searching for nothingness, the void, to find your strength. Because you've got all these tensions from external relationships, and all your strength goes in different directions and pulls you apart. If you can lose that tension and direct all your energy to one channel, you reate tremendous power and wisdom.The essence of Chinese philosophy, in martial arts by extension, is to seek harmony and reduce conflicts. Like everybody has a Buddha in himself and has unlimited power within. I find this very contradictory to western drama, which is what I do, where you escalate the conflict. Chinese philosophy seeks the ease of your attention".

Crouching Tiger, Hidden Dragon is on release in selected cinemas