Clifford Coonan: China can no longer paint itself as a victim

People all over China hauled their TV sets into the streets in July 2001 to watch the International Olympic Committee decide on who would host the Games in 2008. When Beijing was chosen, the joy was overwhelming, and it marked the onset of a heady period of celebration that lasted pretty much until this month, when Steven Spielberg quit as artistic adviser to the Games.

Spielberg's decision to walk away from the Games was not significant in terms of the spectacle itself; he had a purely advisory role to the great Chinese director Zhang Yimou, and his input would have been minimal. But the move is important in marking the first major setback to Beijing's preparations, and will be only the first in a number of challenges the authorities are going to have to deal with in the next five months or so.

People on the streets love the Olympics. It's done wonders for civic pride. So China's reaction to Spielberg's move, when it finally came, was defiant – combined with a message that the world is, once again, out to get China. The official response mentioned "ulterior motives", the subtext being that China is again falling victim to some international plot to undermine the advances that it has made.

China's story is complex, and one of the problems about reporting here is that you can say one thing, but find the opposite is often also true. This ambiguity is reflected in the way China remains a developing country where hundreds of millions of people still live on less than one pound a day, but also has a fast-growing middle class.

But the days in which China can paint itself as a victim are long gone – this is a land that sends men into space, is the world's fourth-biggest economy and is poised to become one of the super-powers of the 21st century. So the Chinese response to Spielberg's quitting suggests that Beijing has not yet learnt how to accept international criticism.

Pleading victim status was fine when China was an economically insignificant and technologically backward country emerging from decades of isolation, famine, war and political upheaval. But it does not sit easily with the vision of China that the world has become familiar with, that of gleaming skyscrapers in Shanghai, cigar-chomping entrepreneurs driving sleek Mercedes through the streets of Shenzhen, and business-suited political leaders in Beijing discussing how to introduce rules safeguarding private property. China is a big country now and the Olympics are meant to be a sign of its coming of age.

Since the IOC's historic announcement, the focus has been on the construction projects as the world's master builders came to the ancient capital to make breathtaking edifices. The six and a half years since 2001 have seen China joining the World Trade Organisation and overseeing an enormous rise in foreign investment. China's diplomatic power has blossomed, and it played a key role in brokering a deal on nuclear weapons with North Korea.

British leaders have lined up to visit China with ever larger delegations, keen to secure lucrative deals to sell education and industrial components to the Chinese. The focus has always been on business, with human rights discussed in private with Chinese leaders after the official handshakes and contract signings.

China's oft-repeated mantra is that human rights are a domestic issue and other countries should not interfere in domestic politics – a line it also uses to justify its support for regimes in Sudan and Burma.

China staunchly adheres to the principle that food is the ultimate human right, and that China is not ready for other human rights, such as greater democratic representation. The party claims its legitimacy not from the people, but from the 1949 revolution that swept it to power. Amid all the triumphalism, the human rights issue has hung around like a bad smell. Rights groups produce daily reports on the fate of missing activists, jailed internet dissidents, underground church workers and journalists whose opinions don't fit the official line.

Every newspaper article that tries to highlight the plight of activists such as Hu Jia, awaiting trial on subversion charges, or the blind, barefoot lawyer Chen Guangcheng, jailed on trumped-up charges for exposing official corruption in his home town, undermine the feelgood factor of Olympic glitz.

China has made incredible progress in the 30 years since Deng Xiaoping first opened up the economy to market reforms, and individual freedoms have accompanied the economic rise. President Hu Jintao's China is a much freer place than the China of Mao Tse-tung. China is home to both scenarios – a repressive society under single-state rule and a swiftly liberalising economy, where the vast majority of people have never had it so good.

How much of an impact have the Olympics made on the thinking of the Politburo powerbrokers in the halls of Zhongnanhai, where the Chinese leadership lives? Probably not as much as the West believes, but the Games are important. To China's rulers, the Olympics are an example of "soft power", which describes China's influence in culture, sports and other spheres outside the army and the Communist Party.

The irony of Beijing's complaint about dark forces trying to politicise the event is savage; everything about the Olympics is political. The party has always considered "soft power" important – Chairman Mao used table-tennis to thaw relations with the US back in the 1970s. A row over whether mainland China or Taiwan would compete in Montreal nearly derailed the 1976 Olympics.

But the overriding obsession is maintaining the party's grip on power and boosting China's influence in the region and the world. And never far from anyone's thoughts, particularly in the army, is the goal of bringing back into the fold that lost province, Taiwan. China considers the self-ruled island a renegade territory and has threatened to take it back by force if it ever tries to declare independence.

There has been speculation among China-watchers that Taiwan is planning to announce its nationhood on the eve of the Olympics, just to see if China will risk wrecking them by invading the island in response. There is also the prospect of Olympic medallists staging a protest in support of, say, the Free Tibet movement, in an echo of the black-power demonstration by Tommie Smith and John Carlos at the 1968 Olympics in Mexico.

Beijing wants to put on a great Olympics, for sure, and from what we've seen, it will be a wonderful spectacle. But the coming months and the two weeks of the event itself will be the true test of how much China has taken on board from 30 years of change. It's a fair bet that Spielberg's departure is only the first hurdle.