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China’s Internet has changed fundamentally since Shi Tao was given a 10-year prison sentence in 2005. Shi’s case was a marker of sorts— the first high profile sentencing in China for online activity. The government says 40 percent of the population is online as of December 2012. That’s 564 million people. In 2005, penetration was 8.5 per cent. Shi was detained in 2004 and sentenced on charges of “leaking state secrets abroad” for messages he wrote summarizing government restrictions on domestic media reporting on the 15th anniversary of the Tiananmen Square massacre. He used his Yahoo email account to post anonymous messages on a US-based pro-democracy forum. His unexpected release from prison on August 23 was announced Saturday in a statement from PEN International, an organization of writers.

Police had identified Shi using information provided to them by Yahoo, which defended itself at the time by saying it had to comply with local laws. The case drew international condemnation for Yahoo and other major Internet service providers for their cooperation with Chinese authorities. Yahoo’s co-founder, Jerry Yang, was slammed at congressional hearings in Washington for his company’s conduct, and Shi’s family sued Yahoo and settled out of court in 2007. In 2005, CPJ honored Shi in absentia, with an International Press Freedom Award.

While Shi was detained in 2004, the government’s efforts to control the vastly larger range of digital platforms now available in China haven’t stopped. On Monday, Chinese authorities once again tightened controls of the country’s wildly popular social media. Under new rules, people who post comments that are deemed libelous and are reposted 500 or more times will face defamation charges and up to three years in prison. The rules also apply to bloggers whose posts are viewed by at least 5,000 Internet users.

Apparently, the targets are what have come to be called “Big V” microblog accounts, people with a strong online voice, a sort of Online Celebrity Corps of commentators, each with a vast number of followers. They are grass roots, populist voices holding forth on everything from pop stars’ dalliances to corrupt government officials. As they mold public opinion, they undercut the government’s authority.

The declared aim of the new rules is to target rumors, but the sweep of microbloggers for “fabricating and spreading false information” was already underway when the rules went public. As The Associated Press reported, “Police around the country have rounded up hundreds of web users on the charge of spreading online rumors.”

The People’s Daily, the Communist Party’s main English language publication, ran an article on August 26 telling readers to “beware of false rumors” spread by Big Vs. Then, on Monday, the Supreme People’s Court and Supreme People’s Procuratorate issued a document defining what constitutes a criminal offense for libel. It took effect on Tuesday. It stated that an online post considered libelous that is forwarded more than 500 times or viewed more than 5000 times could subject the author to up to three years in jail. Offenders of “untrue posts” could also be charged with “stirring up trouble, extortion, or operating an illegal business”.

The Global Times, another official publication, used an editorial today to justify the court’s decision. After hailing the value of the Internet, the paper explained: “Problems brought along by the Internet are accumulating. The most serious is the loss of control of online rumors and attacks on individuals. Online rumors are like a cancer threatening the normal functioning of society. The newly released interpretations will guide judicial authorities to handle online offenses properly and therefore deter rumormongers in an unprecedented way.”

The public reaction has been swift. One of thousands of responses: “I would have to shut up on the Internet now,” one Weibo user said. “If you want to put a person in jail, the easiest way would be to forward his untrue post 500 times.”

In this repressive climate, Shi’s release came unexpectedly. On Sina Weibo, a microblogging platform, most posts reacting to the release were celebratory. Some noted that it is now commonplace for journalists to share information about restrictions on domestic media. “Shi’s case would not have been a big deal today,” one blogger wrote, “But there are still many problems.”

Cracking down on “rumors” is nothing new in China. Madeline Earp, former senior researcher for CPJ’s Asia program, recommended in March 2012 that the best way to stop rumors was to Stop censorship. At the time, Earp was reporting on the sacking of Chongqing party leader Bo Xilai. The government tried to stifle coverage of the scandal, which left journalists covering China with the difficult task of reporting based on unconfirmed information. The Chinese government blamed the international media, not its own lack of transparency and its comprehensive censorship apparatus, for the spreading rumors. Earp pointed out:

Chinese information officials have played a key role in this mess. Internet censors have been working overtime to delete Chinese-language posts on all of these topics, international news reports and media analysts say. Chinese government spokespeople have been unforthcoming. “I am not aware of this case,” the Foreign Ministry told The Mail when asked about Heywood. But by tamping down the rumors, authorities are feeding speculation that they have something to hide.

When Bo’s subsequent trial ended August 26, no date was set for delivering the verdict. The surprisingly open five-day trial of the high-flying Bo was filled with the sort of frank testimony of elite living and family dysfunction that makes for great scandals — and rumors. The country watched with amazement. Bo’s problems had long been rumored online and off and he was the subject of intense discussion. Senior figures do not go on trial in China without a pre-ordained outcome. Bo could be handed the death penalty, but will most likely get life in prison instead. That’s the way things work in China.

Patrick Poon, executive secretary of PEN’s Hong Kong branch at the Independent Chinese PEN Center, caught the contradiction between Shi’s release and the new rumor rules best. He told Radio Free Asia that Shi’s early release should not be taken as a sign of loosening controls: “Even though Shi Tao has been released early, there are no signs that the Chinese authorities are going to loosen control over cyberspace.” He is right.