President Hu Jintao of China made headlines in the early days of the new year saying China and the West were engaged in an escalating culture war, and calling on Chinese people to strengthen cultural production to defend themselves against the assault.

His call has struck a chord with local government officials eager to jump on the culture bandwagon as a new way to spur economic growth. But liberal intellectuals and culture heavyweights have expressed misgivings about Beijing’s new culture blueprint, warning that state promotion of 'cultural industries' will lead to a new property boom under the disguise of developing 'cultural experimental zones'.

'Culture is perhaps China’s last uncut economic pie,' says Zhu Dake, culture researcher at Shanghai Tongji University. 'In a year of leadership transition when everything is politically sensitive, promoting culture is easy and uncontroversial. Everyone is eager to get their share of the pie but big state companies are in for the gain from property development only, and the whole thing is doomed.'

Beijing-based art critic Carol Lu is equally sceptical: 'A government drive to promote culture means we will have more physical features of cultural development. There will be a boom in large-scale galleries and other art spaces but this does not necessarily mean we will have high-quality works.'

President and Communist Party chief Hu Jintao first announced the major cultural drive last October at an annual party meeting, which set the policy priorities for the new year. Against expectations that he will announce measures to tackle China’s challenges on the economic front, Hu unveiled instead an initiative to bolster China’s cultural power overseas and make cultural industries a pillar of the national economy.

Reflecting a consensus among the ruling party that China’s cultural power does not match its growing economic clout, the October plenum highlighted the need for culture to be pursued as a 'source of national unity' and a 'key part of comprehensive national power.'

In his January speech Hu expanded on that theme, warning that 'international hostile forces are intensifying the strategic plot of westernising and dividing China…Ideological and cultural fields are the focal areas of their long-term infiltration,' Hu said in the speech published in the magazine Seeking Truth, one of the Communist Party’s flagship publications.

'It is the first time the leadership has put cultural development on equal footing with the economic one,' says Zhang Guoxiang, researcher at the China Cultural Soft Power Research Centre. 'We talk of the economy as a ‘hard power’ and worry that without a strong economic base our country will be easily dominated. But now there is a clear understanding that without soft power our country will collapse on its own.'

The party has been unnerved by a series of safety and corruption scandals, and worried about escalating unrest in a year which marks the largest transition of leadership power in ten years. The Arab spring revolutions of last year and online postings calling for a 'jasmine revolution' in China have also alarmed Beijing.

Despite appearances though, China’s cultural influence overseas has been expanding steadily. Through state-funded travelling exhibits and performances and with the help of a widening network of Confucius institutes around the globe, Beijing has been promoting the virtues of Chinese traditional culture and the arts.

Nevertheless, party leaders continue to fret about their sway over the hearts and minds of Chinese people. 'The international culture of the West is strong while we are weak,' Hu Jintao lamented in his Jan. 2 speech.

But that weakness is self-inflicted, argue Chinese writers and artists, pointing fingers at state censorship. Han Han, a 29-year-old hip celebrity in China whose blog has millions of fans, caused a stir recently when in an essay called ‘On Freedom’ he lectured Chinese leaders on the reasons for China’s failure to emerge as a cultural giant.

'The restriction on cultural activities makes it impossible for China to influence literature and cinema on a global basis or for us, culturati, to raise our heads up proud,' Han Han wrote.

Zhu Dake says censorship is only one side of the complex picture. The party believes in the power of money and is not ashamed in using it to its own advantage. 'The party is well versed in using the power of money in foreign policy and firmly believes it can buy the creativity of intellectuals too,' he says.

Yet it is not only a sophisticated exchange of loyalty for perks and benefits to coax the intelligentsia that is underpinning the current cultural drive. Local government officials see more incentives to pursue cultural development than the Ministry of Propaganda, which spearheads the campaign and decides on matters of censorship.

Even before the new cultural blueprint was unveiled in October many localities in China have realised promoting cultural and creative industries could provide a convenient new platform for more real estate development.

According to a survey conducted by the Institute for Cultural Industries at the Peking University, in 2010 already there were 1,300 Cultural Industries Experimental or Demonstration Zones in the country. And despite a circular from the Ministry of Culture calling on local governments to control growth in such zones and promote only those that are truly unique and deserving, the same survey found many of them 'uniform and dreary'.