Xiao Qiang (CDT) expounds at US-China Commission on the state of things in Internet development and control. Worth reading.
Money quotes:

Chinese government is the primary driving force for the development of the Internet in China. The authorities see the Internet is a critical instrument to serve its central agenda: economic development to preserve the power status quo of the Chinese Communist Party. Since the Internet first entered China, the government has used an effective multi-layered strategy to control Internet content and monitor online activities at every level of Internet service and content networks. There are FOUR main approaches of Chinese state control of the Internet: Technology, Law, Self-Censorship and Propaganda. (...)

Thus far, the Chinese government has managed to promote the development of the Internet for its economic benefits, while maintaining enough control over online information. However, despite all the state censorship measures I have described above, it is also indisputable that the Internet is expanding the freedom of information and expression in China. Although many of these changes are still incremental, they are nevertheless profound. In the long term, when the Internet penetration in Chinese society continue to grow, and in the time when more radical social, political change emerges in Chinese society, the Internet and other digital communication technologies such as mobile phones will definitely play a powerful role, hopefully to facilitate those changes towards a positive direction: a peaceful transition to a more open and democratic China.