Now, even as Google threatens to pull out of the Chinese search business completely, shutting down Google.cn, the U.S. government has stepped up to the plate challenging China to listen to the concerns of Google and other firms.  U.S. Senator Hillary Clinton delivered sharp remarks criticizing China's duality of cyber-lawlessness and harsh censorship of certain materials.

Now, China is responding indignantly to the criticism.  A spokesperson for China's State Council Information Office, the organization that helps to filter China's internet traffic addressed the U.S. governments criticism, remarking, "[China] bans using the Internet to subvert state power and wreck national unity, to incite ethnic hatred and division, to promote cults and to distribute content that is pornographic, salacious, violent or terrorist.  China has an ample legal basis for punishing such harmful content, and there is no room for doubting this. This is completely different from so-called restriction of Internet freedom."

The response aired Monday on China's state run government website, www.gov.cn.

China has an internet population of over 384 million, but it continues to tightly control the content its users can view, filtering traffic through a system that is dubbed "The Great Firewall" by U.S. observers.  Additionally, over 120 million users in China access the web from their mobile devices, adding a new challenge for internet censors.

China's dispute with the U.S. however, may be a sign of tensions outside the tech arena boiling over.  The U.S. recently announced that it would be selling modern weapons to Taiwan, a renegade state that China still insists it owns.  U.S. President Barack Obama will also meet with the Dalai Lama, Tibet's exiled Buddhist leader, in coming months.  Despite his dogma of pacifism, Chinese officials call the Dalai Lama a dangerous extremist for promoting Tibetan separatism.

Jin Canrong, a professor of international relations at Renmin University in Beijing, comments, "This year, we're seeing problems over trade, the Dalai Lama, and U.S. weapons sales to Taiwan coming to the surface.  The politicization and ideological turn of the Google case could make it more difficult to work together. The basic need for cooperation, economically and diplomatically, hasn't changed, but each of these issues could disrupt cooperation from day to day."

Tibet is one of the key issues that is chilling relations between the U.S. and China.  Another is signs of censorship and oppression stemming from internet activity.  Late last, year a Chinese blogger and author Liu Xiabo was sentenced to 11 years in prison for spreading subversive writings on the internet.  China has banned a variety of U.S. websites including YouTube, Twitter and Facebook in recent months.

China's government denies that the Google attacks originated from within Chinese borders.  And state-run Chinese newspapers on Monday blasted the U.S. as hypocritical.  Editorials accused the U.S. of exploiting video-sharing site YouTube and micro-blogging site Twitter to drive unrest in Iran.  They also point to current and pending legislation on the U.S. state and national level that would impose government filters on the internet content that minors can view.  Proclaims one column, "This 'Internet freedom' that is being promoted everywhere is nothing more than a foreign policy tool, a fantasy of freedom."