China hit back at U.S. criticism of Internet censorship and hacking on Friday, warning that relations between the two global heavyweights were being hurt by a feud centered on web giant Google.

In a new wrinkle to an issue that grabbed center stage after Google threatened to quit China over web hacking, an attorney for a free-speech group said U.S. trade officials have sought more information as they weigh calls to pursue a World Trade Organization case against Chinese Internet censorship.

U.S. Secretary of State Hillary Clinton challenged Beijing and other authoritarian governments on Thursday to end Internet censorship, placing China in the company of Iran, Saudi Arabia and others as leading suppressors of on-line freedom.

China's Foreign Ministry said the U.S. criticisms could hurt relations between the world's biggest and third biggest economies, already strained by disagreements over trade imbalances, currency values and U.S. weapons sales to Taiwan.

The U.S. has criticized China's policies to administer the Internet and insinuated that China restricts Internet freedom, said spokesman Ma Zhaoxu.

We urge the United States to respect the facts and cease using so-called Internet freedom to make groundless accusations against China, Ma said in a statement carried on the Foreign Ministry website http://www.mfa.gov.cn.

Clinton demanded that China investigate the hacking complaints from Google and said countries or individuals that engage in cyber attacks should face consequences and international condemnation.

President Barack Obama agreed with Clinton's speech and continues to be troubled by the cyber security breach that Google blamed on China, a White House spokesman said.

All we're looking for from China are some answers, Bill Burton told reporters traveling with Obama in Ohio.

KEEPING RELATIONS STABLE

China's spokesman also indicated that his government did not want to see the dispute overwhelm cooperation with the Obama administration, which has sought Beijing's help in reviving the world economy and in diplomatic standoffs, such as the nuclear ambitions of Iran and North Korea.

Ma said each side should appropriately handle rifts and sensitive issues, protecting the healthy and stable development of China-U.S. relations.

Ma did not say why China -- which blocks Facebook, Twitter and YouTube and filters overseas websites with content objectionable to the Communist Party -- thought Clinton's censorship allegations were groundless.

Shi Yinhong, an international relations professor at Renmin University in Beijing, said of Washington's public push on Internet controls had had an impact on bilateral relations.

China has admitted there are areas where it can improve, and then Clinton made her comments in a public venue, comparing us to Egypt and Saudi Arabia, he added. So I think over the past year Clinton's speech is the most undiplomatic thing she's said.

Some Chinese media outlets were quick to criticize Clinton's remarks. But many of the Chinese reports were cut from websites within hours of appearing -- a common practice when propaganda authorities handle volatile issues.

In Washington, U.S. officials tried to avoid fueling the public spat even as they said they stood by Clinton's remarks and would continue to speak out on Internet freedom.

Assistant Secretary of State Kurt Campbell met China's ambassador to the United States on Thursday to discuss the issue, the State Department said, and senior U.S. officials suggested his tone differed from the harsh ministry statement.

There are things that China does for public consumption that may or may not reflect the conversations that we have in private, said a senior U.S. official, who said China's private comments differed from its public stance but gave no details.

Many cyber-experts suspect that the hacker attacks from China on Google and other targets were so sophisticated that official involvement was likely.

WTO COMPLIANCE QUESTIONED

Gilbert Kaplan, whose law firm represents the First Amendment Coalition that had tried in 2007 to challenge China's Great Firewall Internet restrictions as a trade barrier, said the Google dispute may help revive that campaign.

They've asked us for more detail about it. We are trying to put that together right now, said Kaplan, a partner at King and Spalding, referring to the U.S. Trade Representative.

The nonprofit coalition first approached the USTR office, run at the time by the Republican administration of former President George W. Bush, in late 2007 with the idea of challenging China's barriers to Internet access at the WTO.

Although no case was filed, Kaplan said U.S. trade officials never ruled out that possibility.

We're continuing to request that they start that case, Kaplan said.

USTR spokeswoman Deborah Mesloh said her office was continuing to think through the complex Google matter, about which the Obama administration had concerns beyond trade.

The administration awaits China's response to our concerns, she said in a statement.

With the two nations joined at the hip economically, Sino-U.S. tensions are unlikely to escalate into outright confrontation, but could make cooperating on global economic and security issues all the more difficult.

(Additional reporting by Arshad Mohammed, Alister Bull, Chris Buckley, Lucy Hornby, Yu Le and Huang Yan; Writing by Paul Eckert; Editing by Philip Barbara)

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