Eleven years ago James Cameron's Titanic premiered in China and was the country's highest-grossing film, until Transformers 2 this summer.

Now, a month before his 3-D extravaganza Avatar debuts in theaters here, the director is talking up his latest creation.

"The Chinese economy is growing so rapidly (and) is beginning to face the same problems that we've had in America and Europe, such as the degradation of our natural environment and resources," says Cameron in a telephone interview.

"I think that for anybody that loves nature, for anybody that feels that their life is being changed by living in a technological society or civilization, Avatar has something to say.

"The theme is going to have relevance for Chinese people the same way it has in all the places that is dealing with this issue about industrialization."

In the $230 million fantasy film, Cameron creates a new alien world named Pandora, where Avatars, or hybrid creatures that are a mix of the DNA of humans and the local species Na'vi, fight with pure Na'vi - tall, blue aliens - for a precious mineral on the planet.

Cameron's other smash hit, The Terminator, is widely known as being inspired by a feverish dream in 1981, in which he saw a chrome, metallic and skeletal robot came out of a fire.

Avatar, he says, was inspired by all his dreams.

"I call it my dream project, or pinch-me project. It pinches me and lets me know I am actually awake now," he says.

Cameron, whose parents were an electrical engineer and an artist, was keen on futurology even as a kid. He read science fiction during the day and painted the subjects at night.

The University of Toronto dropout did various jobs, such as truck driver and machinist, while writing and illustrating science fiction stories. In 1977 he decided to start his film career after seeing Star Wars, which stunned him and made him obsessed about how George Lucas had done it.

"For me, Avatar is the opportunity to do the kind of movie I've always dreamed of making, in which you create an environment, plants, landscapes and creatures," he says. "I guess I've been working toward it for all this time."

To make the flick, which according to Wired Magazine could change the way people watch films, Cameron has worked hard in the 12 years since making Titanic, even though he directed no feature films.

He partnered underwater camera specialist Vincent Pace and deep-sea explorer Andrew Wight to make four documentaries on the deep ocean, two in 3-D, while perfecting what he visions as "the holy grail of cameras" - a high-definition rig that is maneuverable, digital, high-resolution, 3-D and will not give viewers a headache.

He let other directors, such as Robert Rodriguez, test his system to demonstrate demand for more 3-D movies, while talking directly to theater owners to persuade them digital 3-D is the new trend in cinema and they should invest in new-generation projection systems right away.

In 2002, when Peter Jackson's Weta Digital in New Zealand created the stunningly believable computer-generated character Gollum in The Lord of the Rings films, Cameron found the special effects technology was ready, too.

After four years of production, Avatar turned from being an idea in his mind for 15 years to be the first action movie shot entirely in digital 3-D. The characters and objects appear to leap from the screen. Around two-thirds of the film is computer-generated, one-third real. Cameron deliberately blurs the distinction between the two so it is hard to tell where reality ends and fantasy begins. The film features more than 3,000 effects shots, and Cameron has redone many of them up to 20 times.