ABSTRACT
The weakening of the state's overall regulatory capacity has opened doors to various sources of challenge to sovereignty, both domestic and external. This chapter outlines six major reasons Falungong has constituted such critical challenges to the Chinese state. It provides discussions of "spiraling" interactions between the Chinese state and Falungong on the political front and, more important, in the "virtual" front of the Internet. The chapter sheds some light on the Chinese state's regulatory capacity and societal resistance in the reform era. The challenge Falungong has posed to the internal sovereignty of China was countered by the authorities' blanket regulations that would govern everything from simple office applications to sensitive code for e-commerce. What is ironic, however, is that many of the factors that have reinforced the Falungong challenge are in fact the products of transitional reforms, notably those of decentralization, liberalization, and internationalization. In a sense, this is where the Chinese leadership's fundamental dilemma lies.
