As Beijing and Washington disagree publicly on human rights, the State Department has said it will pour U.S. $19 million into helping dissidents in China and Iran bypass Internet censorship.
Officials plan to invest the money in anti-censorship technologies, including "slingshot" firewall circumvention software.
The announcement by Michael Posner, Assistant Secretary of State in charge of the Bureau of Democracy, Human Rights and Labor, came amid strong U.S. criticism of China’s human rights record during economic and strategic dialogues.
Posner said the new software uses algorithms to track what users in Iran and China want to view online but cannot, because of government blocks and filters.
"We’re going to be redirecting information back that the government has initially blocked,” Posner said in a telephone briefing this week.
"We're responding with new tools. This is a cat-and-mouse game," he told reporters. "We're trying to stay one step ahead of the cat."
Posner declined to identify who would benefit from the scheme, for security reasons.
But he said that censored information would be redirected to e-mail, blogs, and other online sources in Iran and China.
The move also comes as China conducts one of its harshest crackdowns on dissent in years, detaining dozens of lawyers, artists, and activists following online calls for a "Jasmine" revolution inspired by recent uprisings in the Middle East.
Secretary of State Hillary Clinton made a key speech in February vowing to support Internet freedom around the world.
Keyword filters embedded in China's Great Firewall immediately blocked searches for "Clinton" or "Hillary" in the wake of the speech, as Beijing mobilized official media commentators to slam the speech as Western interference in its affairs.
Earlier this week, Clinton described China’s rights record as "deplorable," prompting Beijing to defend its record in terms of a growing standard of living for many of its poorest people.
"They're worried, and they are trying to stop history, which is a fool's errand," she said in an interview with The Atlantic magazine on Tuesday.
"They cannot do it. But they're going to hold it off as long as possible," Clinton said.
China's foreign ministry gave a muted response to the interview on Thursday.
"I think perhaps you have taken the quotes out of context, and ought to look at the full picture to understand the U.S. appraisal of the talks' achievements," Jiang told reporters in Beijing.
On human rights, "we have expressed our point of view many times on the relevant question," Jiang said.
U.S. criticism of China's rights record at the Washington talks, which focused on economic ties, was largely ignored by official media.
New York-based human rights activist Liu Qing said China's assertion that human rights had improved in the past six decades of Communist Party rule could only be verified by ordinary people themselves.
"It's not for those in power to say whether China's rights record has seen a lasting improvement," Liu said. "You have to ask those on the other end of it, or international observers."
"The Chinese Communist Party isn't the only dictatorship to take this attitude that one's own citizens don't want human rights or democracy because of some special circumstances in their country," Liu said.
"But these are the false arguments of the oppressor."
Chinese netizens, many of whom followed Clinton's February speech in real-time on Twitter, appeared to welcome the news.
"I live in Guangdong so it's not too hard for me to climb over the Wall," wrote well-known online commentator "Lao Lang." "But I have come across some netizens in inland provices who can't even get online."
"If the U.S. is willing to work on this issue and supply some circumvention capability, we would definitely welcome that."
Social networking sites like Facebook and Twitter are routinely blocked by the Chinese authorities, as are keyword searches linked to recent uprisings in the Middle East, and the word "jasmine."
The U.S. $19 million announced by Posner is the last of U.S. $30 million in funding the State Department was given in fiscal year 2010 for Internet-related projects.
The department was allotted just U.S. $20 million in the current year, an amount which Posner said would be quickly spent.
Reported by Ho Shan for RFA's Cantonese service, and by Shi Shan for the Mandarin service. Translated and written in English by Luisetta Mudie.