China hit back at U.S. criticism of Internet censorship and hacking on Friday, warning that relations between the two global heavyweights were being hurt by a feud centered on web giant Google.

U.S. Secretary of State Hillary Clinton challenged Beijing and other authoritarian governments on Thursday to end Internet censorship, an issue that has jumped to the heart of U.S.-China ties after Google threatened to quit China due to hacking and web restrictions.

China's Foreign Ministry said the U.S. criticisms could hurt relations between the world's biggest and third biggest economies, already strained by disagreements over trade imbalances, currency values and U.S. weapons sales to Taiwan.

The U.S. has criticized China's policies to administer the Internet and insinuated that China restricts Internet freedom, said spokesman Ma Zhaoxu. This runs contrary to the facts and is harmful to China-U.S. relations.

We urge the United States to respect the facts and cease using so-called Internet freedom to make groundless accusations against China, Ma said in a statement carried on the Foreign Ministry website www.mfa.gov.cn.

White House spokesman Bill Burton made clear on Friday that President Barack Obama agreed with Clinton's speech.

Clinton criticized the cyber policies of China and Iran, among others, and demanded Beijing investigate the hacking complaints from Google.

Countries or individuals that engage in cyber attacks should face consequences and international condemnation, she said.

All we're looking for from China are some answers, Burton told reporters traveling with Obama on a trip to Ohio. Obama continues to be troubled by the cyber security breach that Google blamed on China, he added.

China's spokesman also indicated that his government did not want to see the dispute overwhelm cooperation with the Obama administration, which has sought Beijing's backing on economic policy and diplomatic standoffs, such as Iran and North Korea.

Ma said each side should appropriately handle rifts and sensitive issues, protecting the healthy and stable development of China-U.S. relations.

On Thursday, Chinese Vice Foreign Minister He Yafei played down the dispute with Google and indicated that his government was more worried about broader economic and political disputes that could flare up in coming months.

Facebook, Twitter and YouTube are blocked in China, which uses a filtering firewall to prevent Internet users from seeing overseas websites with content objectionable to the Communist Party.

Sino-U.S. ties have been impacted, Shi Yinhong, an international relations professor at Renmin University in Beijing, said of Washington's push on Internet controls.

China has admitted there are areas where it can improve, and then Clinton made her comments in a public venue, comparing us to Egypt and Saudi Arabia, he added. So I think over the past year Clinton's speech is the most undiplomatic thing she's said.

MURKY MEDIA RESPONSE

Some sections of the Chinese media were quick to criticize Clinton's remarks. But many of the Chinese reports were themselves cut from websites within hours of appearing.

It was unclear why they were removed, but Chinese websites often adjust or cut content based on propaganda authority instructions, especially for volatile issues.

Many cyber-experts suspect that the hacker attacks from China on Google and other targets were so sophisticated that official involvement was likely.

Ties between China and the United States have been put to the test in recent months over trade, currency, climate change and arms sales to Taiwan.

With the two nations joined at the hip economically, Sino-U.S. tensions are unlikely to escalate into outright confrontation, but could make cooperating on global economic and security issues all the more difficult.

Earlier this month, China denounced the U.S. sale of Patriot air defense missiles, capable of intercepting Chinese missiles, to Taiwan, which Beijing claims as its own.

China announced its own anti-missile test soon after.

Beijing has warned that more U.S. weapons sales to Taiwan could badly bruise relations with Washington, and has urged Obama not to meet the Dalai Lama, the exiled Buddhist leader of Tibet who Beijing denounces as a separatist.

I think over the short haul (the Google issue) is going to go away because other problems that the U.S. and China face are rather numerous, said Niu Jun, an international studies expert at Peking University. I think economic and trade issues are still more important.

(Additional reporting by Alister Bull in CLEVELAND; Chris Buckley, Lucy Hornby, Yu Le and Huang Yan; Editing by Philip Barbara)

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