However, again, I don't think it will do them much good, especially since forcing people to deploy strong cryptography everywhere isn't in their best interests. They could try only doing the AH part of the protocol, of course, but even then, using forged, stolen, or otherwise ingenuine credentials isn't that hard. Crypto isn't a panacea, and if you can't trust both endpoints its hard to trust the crypto itself...
It seems to me that the actual result of the Chineese experiment in net censorship will probably be something in between what the Communist government is hoping for and what some hard line crypto anarchists are predicting. Nets and good crypto tools aren't going to make it possible for everyone in China with a pc to discuss any subject without fear of government reprisal, but the new technology will almost certainly result in a significant loss of control for the state. Censorship will persist in China, but evading it will be easier and safer than it is now. Nets being what they are, it will be easier for people to organize, and discussions and debates will probably be more productive than they are now. The pressures of crypto anarchy might not be strong enough to liberate China overnight, but they will exert a powerful and steady force towards liberalization. Once Chineese society has coexisted with a vibrant black information market for a decade or two, making things legal will probably seem sensible to most people -- no one will expect the sky to fall if people are allowed to speak their minds.