Last week The Economic Observer, a state-owned Beijing newspaper, published an extraordinary five-page tribute to the elderly economist and public intellectual Mao Yushi, proclaiming him a "national treasure". Days earlier, the same man had been visited by police from the Public Security Bureau.

Both events occurred because Mao's name is third on a list of signatories for a liberal manifesto called Charter 08, which has spawned the most significant democracy movement since the confused and tragic protests of 1989.

The President, Hu Jintao, appeared to acknowledge the charter by implicitly rejecting it on December 18, when he proclaimed, "We will never copy the model of the Western political system." The Communist Party has devoted vast resources to contain it. So far the party has refrained from crushing the charter and its supporters, who appear to include many senior editors in the state media.

The strange thing is that Mao Yushi never actually signed the charter that is causing him such a fuss. "I was involved in the original draft. I made two or three suggestions to revise it, and then it was published on the internet," he said in an interview at his modest flat in West Beijing.

"My point was that the standpoint of the charter should be more positive. That means we should encourage the Government to change the policy and not just criticise because we can see they have already made big progress, not only on the economic but the political side. I don't think they took my advice. In fact I did not sign it."

After liberation, when Mao Yushi was in his twenties, he watched the Communist Party replace professionals like his uncle Mao Yisheng, China's most famous engineer and bridge builder, with revolutionary heroes from the People's Liberation Army. He was sent to a labour camp when he was in his thirties for being a "rightist". In his forties he was ridiculed and beaten during the Cultural Revolution.

Then Deng Xiaoping rose to power and Mao taught himself economics and quickly became an expert in quantitative modelling. He has helped to mentor a generation of policy heavyweights such as Zhang Weiying, the dean of Peking University's Guanghua management school, and the World Bank's chief economist, Justin Lin.

"He is doing his best for his country; I admire him quite a lot," says Citigroup's chief Asia economist, Huang Yiping. "He has always acted independently so he is not actually the closest friend of the Government, but he has been broadly influential on keeping the Government on the market-oriented reform path."

Mao says he has refused to take a prominent official role "because this is a terrible government". Mao agrees with the principles of the charter and is not worried that his name has been mistakenly added to the signatory list. His point is that today's democracy activists need some perspective. He says there is no comparison between the totalitarian state he lived under in the first half of his adult life - under the other Mao - and the China he has since experienced in the era of "opening and reform".

"There has been big progress in political reform and [particularly] in the protection of human rights," he says. "So many people were killed because of having different views. Every year, even every day, many, many people were killed. I estimate 50 million people were killed by the Government. Every day they killed 5000. But these days the Government even has trouble killing one person," he says, referring to the convicted murderer Yang Jia, who became an internet hero last year after being beaten by police and later exacting revenge by killing six of them. "I lived in circumstances of fear, there was no protection at all. Now I don't live in fear. Now the Chinese people feel safe."

Mao thanks Western culture for China's improvements over the past 30 years. He says progress has come from exchanging information, capital and goods rather than Western pressure.

He is known in China for his ridicule of the Communist Party's "red line", which preserves a minimum area of agricultural land it deems necessary for food security. "Do we believe in the market economy or do we believe in the planned economy?"

His views have drawn the shrill and often vulgar wrath of the "angry youth" of the internet. And this, funnily enough, leads him to his strongest criticisms of modern China. "In England people were educated to be gentlemen. In China we should educate people as Chinese gentlemen. In this regard, the Chinese education system has been an utter failure. I fear that these people are like the Red Guards of the Cultural Revolution. They don't respect others or even themselves. They have no idea about courtesy, manners or respect."

On Wednesday, the day Mao Yushi turned 80, he received a second security visit, this time from the party secretary of a division of a leading government think tank, the Chinese Academy of Social Sciences. "I could feel his timidity when he was talking with me. He was not here to investigate, he came here on orders." Does he think the official actually wanted to sign? "Yes, I think so. He even brought a big birthday cake."