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The plot of Crouching Tiger, Hidden Dragon (2000) is set in motion by a sequence of decisions and events involving a legendary sword, a retired warrior, and a restless young aristocrat. The following specific actions trigger the narrative:
The story begins when Li Mu Bai, a renowned Wudang swordsman, emerges from a period of meditation and announces his intention to retire from the life of a warrior. Despite being a master, he admits to his longtime friend and unconfessed love, Yu Shu Lien, that he did not find true enlightenment in meditation; instead, he felt surrounded by "boundless sorrow." To symbolize the end of his career, he decides to give up his legendary weapon.
Li Mu Bai asks Shu Lien to take his fabled Green Destiny—a 400-year-old jade-hilted jian (straight sword)—to Beijing. He wants her to deliver it to their mutual benefactor, Sir Te, for safekeeping. This action is pivotal because it physically moves the catalyst of the plot (the sword) from the protection of a master to a vulnerable location.
While delivering the sword in Beijing, Shu Lien meets Jen Yu, the daughter of the powerful Governor Yu. Jen is about to enter an arranged marriage but is secretly fascinated by the life of a wuxia warrior. During their meeting, Jen expresses envy for Shu Lien’s freedom, while Shu Lien observes Jen’s refined but restless nature. This meeting establishes the connection between the established warriors and the hidden "tiger" (Jen).
The plot truly begins to move when a masked thief sneaks into Sir Te’s compound at night and steals the Green Destiny. Shu Lien intercepts the thief, leading to an iconic rooftop chase and duel. The thief’s exceptional skill—including the ability to perform qinggong (the "lightness technique" used to glide across walls and roofs)—reveals that they are no common criminal.
The investigation into the theft quickly reveals that the thief is Jen Yu, who has been secretly trained in martial arts by her governess. It is then discovered that the governess is actually Jade Fox, a legendary criminal who murdered Li Mu Bai’s master years ago.
The summary implies a straightforward investigation, missing the nuance that Shu Lien tries to cover up the theft to protect Jen's family honor, which drives much of the tension in the first act.
The plot is initiated by Li Mu Bai's decision to retire due to a lack of enlightenment ('endless sorrow') and his request for Yu Shu Lien to deliver the Green Destiny sword to Sir Te in Beijing. The inciting incident occurs when Jen Yu, the Governor's daughter who is secretly trained in Wudang arts by the criminal Jade Fox, steals the sword from Sir Te's estate to escape the constraints of her impending arranged marriage.