China widened its attack against U.S. criticisms of Internet censorship on Monday, raising the stakes in a dispute that has put Google in the middle of a political quarrel between the two global powers.

China has defended its curbs on the Internet nearly two weeks after the world's biggest search engine provider, Google Inc., threatened to shut down its Chinese Google.cn site after a severe hacking attack from within China.

The dispute could narrow room for Beijing and Washington to back down quietly and focus on other disputes such as trade, currency, human rights and U.S. weapons sales to Taiwan.

The more this case takes on high-level political import for the Chinese government, the more likely it is to stick to its guns, said David Wolf, president of Wolf Group Asia, an advisory firm covering Chinese media and telecommunications.

The Chinese government can't be seen as backing down on such a fundamental issue, said Wolf.

U.S. Secretary of State Hillary Clinton last week urged China and other authoritarian nations to pull down Internet censorship, prompting scathing commentary in Chinese papers.

The White House backed Google, while China accuses Washington of using the Internet for its own aims.

This year, we're seeing problems over trade, the Dalai Lama, and U.S. weapons sales to Taiwan coming to the surface, said Jin Canrong, an international relations expert at Renmin University.

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.

In coming months, U.S. President Barack Obama may meet the Dalai Lama, Tibet's exiled Buddhist leader who Beijing considers a separatist. Washington has also unveiled arms sales to Taiwan, the self-ruled island Beijing regards as a renegade province.

In Riyadh, the CEO of Cisco Systems Inc, John Chambers, told reporters he was optimistic that Google's dispute in China would be resolved through give and take.

Chinese Human Rights Defenders said its website and four other activist sites were hit by denial of service attacks on Jan 23-24. It called the Chinese government the most likely culprit.

DEFENSE

China's State Council Information Office said the nation 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, an unnamed spokesperson said in comments issued on the central government's website (http://www.gov.cn).

Although the comments made no direct mention of Google or Clinton, the State Council Information Office is the cabinet arm of China's propaganda apparatus, steered by the Communist Party, and is one of several agencies behind Internet policy.

China's Education Ministry published a notice on Monday reminding schools they should be monitoring and filtering web content, as well as teaching Internet morality.

China's Ministry of Industry and Information Technology rejected suggestions the government was behind the sophisticated hacker attacks described by Google.

China has jailed dissidents and Tibetan activists who used the Internet to challenge Communist Party policies and one-party rule. Prominent dissident, Liu Xiaobo, was jailed for 11 years in December on charges of inciting subversion, largely through essays he published on overseas Internet sites.

The Communist Party mouthpiece, the People's Daily, on Sunday said United States used social media like Twitter and YouTube, to foment Iran unrest. Both are blocked in China.

On Monday, the paper called Washington hypocritical, noting U.S. laws restrict images and words that can be seen by children.

This 'Internet freedom' that is being promoted everywhere is nothing more than a foreign policy tool, a fantasy of freedom, said a commentary in the paper.

Google said it will negotiate for an unfiltered search engine, but firms in sensitive sectors like the Internet or media find politics are never far from the negotiating table.

Google may look back and see it pursued an ill-advised course by bringing in the U.S. government in such high-profile way, said Wolf, the industry consultant.

(Additional reporting by Ben Blanchard in Beijing and Souhail Karam in Riyadh; Editing by Bill Tarrant)

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