Since Imperial times, Chinese governments have relied on neighbors to inform on each other as a way to preserve social control.
But with China now becoming wealthier and its citizens more mobile, the government is embracing the extensive use of street-by-street surveillance technology - and the U.S. government is becoming less sure that American companies should be playing a central role in the effort.
The U.S. Commerce Department is drafting new rules on what security equipment American companies can sell to China. The move comes in response to rapid advances in surveillance technology and the increasing involvement of U.S. companies in the Chinese market as the Olympics approach.
People involved with the process said the Commerce Department was singling out biometric technology - face-recognition software, in particular - which Chinese security agencies could use to identify political and religious dissidents.
E. Richard Mills, chief spokesman for the department, confirmed that it had begun drafting new rules but said that it was unclear whether the regulations would have the overall effect of tightening or loosening export controls. Mills said any changes would have to be reviewed by other government agencies and submitted to public comment.
Chinese security agencies are rapidly increasing their spending on video systems with powerful computer analysis tools. U.S. companies, with heavy financial backing from American hedge funds, have played a central role in helping Chinese cities install thousands of street surveillance cameras and use computers to process the video.
The U.S. Congress has become concerned about the export controls on such activity.
''It remains extremely important to have such controls in place so that our country's exports do not enable governments abroad to repress the fundamental freedoms that we cherish here at home,'' said Representative Edward Markey, Democrat of Massachusetts, who heads the House Subcommittee on Telecommunications and the Internet. ''I will be watching closely as this process develops to ensure that current U.S. export controls are not weakened.''
Honeywell, General Electric and United Technologies have all been aggressively pursuing contracts in China to sell advanced surveillance equipment from the United States, partly in preparation for the Olympics. All said in statements that they complied with current regulations, and GE said that it ''would fully expect to be supportive of and compliant with any future changes.''
IBM has also been active in the market but had no immediate comment.
Mills said that the Commerce Department's decision this month to begin overhauling the relevant export regulations reflected a general effort at the agency to make sure that all export controls were up to date.
Congress banned the transfer to China of any equipment related to crime control after the Tiananmen Square killings in 1989.
At the time, the Commerce Department had some export restrictions on crime-control equipment, dating back to 1975 and also covering shipments to other totalitarian countries, like North Korea.
The regulatory overhaul that has just started, applying to very modest exports of crime-control equipment to totalitarian countries as well as China, is the first since the early 1990s.
William Reinsch, the Clinton administration's under secretary of commerce for export administration, is now the president of the National Foreign Trade Council, a Washington group that represents multinationals on trade issues. Reinsch said he was concerned that the new rules could limit U.S. export opportunities and give new ones to European and Asian companies.
Whenever new export controls are drafted, federal agencies tend to add more products to the list of restricted goods, and agencies seldom agree to remove any items, he said.
Mills said that the Commerce Department would analyze what products are available from companies not based in the United States before issuing any new export-control regulations.
At a public security convention for police buyers in November in Shenzhen, China, Bosch of Germany had a large booth near Honeywell's to promote its surveillance cameras. Panasonic and Siemens have also been selling security systems in China, according to the Security Industry Association, a trade group in Washington.
China Security and Surveillance Technology concluded an agreement last week with the South Korean company LG Electronics to distribute LG's closed-circuit television equipment and accessories in China for three years.
But U.S. companies heavily promote their equipment as being the most advanced on the market, in part because much was developed to fight the threat of terrorist attacks in the United States.
Current U.S. regulations allow the export of most surveillance equipment if regulators believe that it could be used in a factory or office complex and is not intended exclusively for police work.
In addition to multinationals that export surveillance equipment from the United States, there are other security companies that are incorporated in the United States- but with virtually all of their employees in China.