The plundering of Western technology, business and government databases by Chinese hackers is a sign of Beijing's double standards towards the development of the Internet, experts say.
According to a spokesman at the Chinese embassy in London, hacking is a crime punishable by death.
But Peter Tippett, of CyberTrust, an organization that collects global information on the activities of hacking groups, said that last year, the 80-person X-Focus hacking group was able to hold a conference in Beijing. Called X-Con, the conference discussed coordinating attacks on Japanese Web sites during the row between the two countries over the content of school history books in Japan.
"In China, the people who hack have to get through the Great Firewall of China and all e-mail must go through government e-mail filters. Yet at the moment we are finding that the vast majority of computer attacks are coming from China," Tippett said.
Inside China, the picture is very different. The country may have 120 million people online at the start of the year -- second only to the US -- but they are not allowed to see sensitive political information about events in their own country.
Indeed, misuse of the Internet -- disseminating information about political unrest, for example -- is routinely punished by the authorities. In 2004, an Amnesty International report noted that "there has been a dramatic rise in the number of people detained or sentenced for Internet-related offences, an increase of 60 percent as compared to the previous year's figures."
However, there are signs that the authorities are not having it all their own way. For example, Falun Gong, the quasi-religious meditative movement banned by the Chinese authorities, has turned to the Internet to show the outside world how it has been repressed.
Feng Ma, an expert on China for the Taiwanese intellectual property law firm Osha Liang, said: "A week or two ago, Falun Gong got pictures sent out of meditators being beaten up and arrested and that has happened a lot. Although on the surface people register their Internet use with the authorities, there are a lot of people who are now using proxy servers to hide what they are doing from the authorities."
According to Ma, most illicit users in China are concerned with more mundane issues such as getting free goods and software and making money.
"Intellectual property is seen as fair game, especially because Western companies put their factories in China so they can get cheap labour and avoid environmental rules," Ma said.
Yet there are also growing online protests aimed at endemic corruption among state functionaries. Interestingly, the authorities in Beijing are trying to root out corruption among local party bureaucrats and this may be encouraging the online protests.
"There is a massive online debate on corruption that is ironically being government-led ... and people are getting their heads cut off," Ma said.
Overall, the main concern for the Chinese government is with "stabilization," the filtering out of key words that allow its population to search for seditious material or for sites trying to foment organized opposition to the central government. Once again, there are signs that they might not be able to control it as fully as they would like.