So far, the Olympics have been an open invitation to China-bash, a bottomless excuse for Western journalists to go after the Commies on everything from internet censorship to Darfur. Through all the nasty news stories, however, the Chinese government has seemed amazingly unperturbed. That’s because it is betting on this: when the opening ceremonies begin friday, you will instantly forget all that unpleasantness as your brain is zapped by the cultural/athletic/political extravaganza that is the Beijing Olympics.

Like it or not, you are about to be awed by China’s sheer awesomeness.

The games have been billed as China’s “coming out party” to the world. They are far more significant than that. These Olympics are the coming out party for a disturbingly efficient way of organizing society, one that China has perfected over the past three decades, and is finally ready to show off. It is a potent hybrid of the most powerful political tools of authoritarianism communism — central planning, merciless repression, constant surveillance — harnessed to advance the goals of global capitalism. Some call it “authoritarian capitalism,” others “market Stalinism,” personally I prefer “McCommunism.”

The Beijing Olympics are themselves the perfect expression of this hybrid system. Through extraordinary feats of authoritarian governing, the Chinese state has built stunning new stadiums, highways and railways — all in record time. It has razed whole neighborhoods, lined the streets with trees and flowers and, thanks to an “anti-spitting” campaign, cleaned the sidewalks of saliva. The Communist Party of China even tried to turn the muddy skies blue by ordering heavy industry to cease production for a month — a sort of government-mandated general strike.

As for those Chinese citizens who might go off-message during the games — Tibetan activists, human right campaigners, malcontent bloggers — hundreds have been thrown in jail in recent months. Anyone still harboring protest plans will no doubt be caught on one of Beijing’s 300,000 surveillance cameras and promptly nabbed by a security officer; there are reportedly 100,000 of them on Olympics duty.

The goal of all this central planning and spying is not to celebrate the glories of Communism, regardless of what China’s governing party calls itself. It is to create the ultimate consumer cocoon for Visa cards, Adidas sneakers, China Mobile cell phones, McDonald’s happy meals, Tsingtao beer, and UPS delivery — to name just a few of the official Olympic sponsors. But the hottest new market of all is the surveillance itself. Unlike the police states of Eastern Europe and the Soviet Union, China has built a Police State 2.0, an entirely for-profit affair that is the latest frontier for the global Disaster Capitalism Complex.

Chinese corporations financed by U.S. hedge funds, as well as some of American’s most powerful corporations — Cisco, General Electric, Honeywell, Google — have been working hand in glove with the Chinese government to make this moment possible: networking the closed circuit cameras that peer from every other lamp pole, building the “Great Firewall” that allows for remote internet monitoring, and designing those self-censoring search engines.

By next year, the Chinese internal security market is set to be worth $33-billion. Several of the larger Chinese players in the field have recently taken their stocks public on U.S. exchanges, hoping to cash in the fact that, in volatile times, security and defense stocks are seen as the safe bets. China Information Security Technology, for instance, is now listed on the NASDAQ and China Security and Surveillance is on the NYSE. A small clique of U.S. hedge funds has been floating these ventures, investing more than $150-million in the past two years. The returns have been striking. Between October 2006 and October 2007, China Security and Surveillance’s stock went up 306 percent.

Much of the Chinese government’s lavish spending on cameras and other surveillance gear has taken place under the banner of “Olympic Security.” But how much is really needed to secure a sporting event? The price tag has been put at a staggering $12-billion — to put that in perspective, Salt Lake City, which hosted the Winter Olympics just five months after September 11, spent $315 million to secure the games. Athens spent around $1.5-billion in 2004. Many human rights groups have pointed out that China’s security upgrade is reaching far beyond Beijing: there are now 660 designated “safe cities” across the country, municipalities that have been singled out to receive new surveillance cameras and other spy gear. And of course all the equipment purchased in the name of Olympics safety — iris scanners, “anti-riot robots” and facial recognition software — will stay in China after the games are long gone, free to be directed at striking workers and rural protestors.

What the Olympics have provided for Western firms is a palatable cover story for this chilling venture. Ever since the 1989 Tiananmen Square Massacre, U.S. companies have been barred from selling police equipment and technology to China, since lawmakers feared it would be directed, once again, at peaceful demonstrators. That law has been completely disregarded in the lead up to the Olympics, when, in the name of safety for athletes and VIPs (including George W. Bush), no new toy has been denied the Chinese state.

There is a bitter irony here. When Beijing was awarded the games seven years ago, the theory was that international scrutiny would force China’s government to grant more rights and freedom to its people. Instead, the Olympics have opened up a backdoor for the regime to massively upgrade its systems of population control and repression. And remember when Western companies used to claim that by doing business in China, they were actually spreading freedom and democracy? We are now seeing the reverse: investment in surveillance and censorship gear is helping Beijing to actively repress a new generation of activists before it has the chance to network into a mass movement.

The numbers on this trend are frightening. In April 2007, officials from 13 provinces held a meeting to report back on how their new security measures were performing. In the province of Jiangsu, which, according to the South China Morning Post, was using “artificial intelligence to extend and improve the existing monitoring system” the number of protests and riots “dropped by 44 per cent last year.” In the province of Zhejiang, where new electronic surveillance systems had been installed, they were down 30 per cent. In Shaanxi, “mass incidents” — code for protests — were down by 27 per cent in a year. Dong Lei, the province’s deputy party chief, gave part of the credit to a huge investment in security cameras across the province. “We aim to achieve all day and all-weather monitoring capability,” he told the gathering.

Activists in China now find themselves under intense pressure, unable to function even at the limited levels they were able to a year ago. Internet cafes are filled with surveillance cameras, and surfing is carefully watched. At the offices of a labor rights group in Hong Kong, I met the well-known Chinese dissident Jun Tao. He had just fled the mainland in the face of persistent police harassment. After decades of fighting for democracy and human rights, he said the new surveillance technologies had made it “impossible to continue to function in China.”

It’s easy to see the dangers of a high tech surveillance state in far off China, since the consequences for people like Jun are so severe. It’s harder to see the dangers when these same technologies creep into every day life closer to home-networked cameras on U.S. city streets, “fast lane” biometric cards at airports, dragnet surveillance of email and phone calls. But for the global homeland security sector, China is more than a market; it is also a showroom. In Beijing, where state power is absolute and civil liberties non-existent, American-made surveillance technologies can be taken to absolute limits.

The first test begins today: Can China, despite the enormous unrest boiling under the surface, put on a “harmonious” Olympics? If the answer is yes, like so much else that is made in China, Police State 2.0 will be ready for export.

Read my full report on how U.S. corporations are helping to build China’s high tech Police State in Rolling Stone.

The Shock Doctrine: The Rise of Disaster Capitalism is now out in paperback. You can find extensive resources related to the book at www.shockdoctrine.org.

---