Now that China has approved Intel's plan to build PC chips in China, the question that should be asked is: Will the U.S. grant its approval?

Assuming Intel goes forward with reported plans to build a 12-inch, 90-nanometer wafer fab in China, its new factory will create a conduit to further fuel China's booming PC and Internet markets. Intel has a big stake in both of these markets where it's role is not just supplying OEMS. Intel is a strategic player in China's state-controlled Internet ecosystem.

I got my first glimpse of Intel's China Internet connection three years ago in a visit to Beijing where I reported on the role Intel is playing in helping China control and develop the Internet cafe and video game business. Intel, I learned, is playing a key role in helping to develop the PC-ecosystem that underlies China's vast Internet caf business. And in China, Internet cafes are not just modern day pool halls where young people congregate; they are media centers under the strict control of the central government.

Late last year, according to a report published by DigiTimes, Intel stepped up its involvement in China's Internet cafe business and formed a strategic alliance with Elitegroup Computer Systems to jointly enter the Internet cafe PC market in China with the introduction of Intel's Platform Administration Technology software solution.

The company is seeking partnerships with motherboard ODMs throughout China for the development of PCs targeting Internet cafes.

According to recent estimates, there are 112,264 government-licensed Internet cafes in China with a market of approximately 6.1 million desktop PCs.

More recently, Intel China signed a memorandum of understanding with TCL Computer and Langtaosha Chain Netcafe in Nanjing to construct a chain of net cafes. TCL will use over 100,000 TCL branded computers with Intel processors in its franchised net cafes. Intel and TCL will provide customized solutions to Langtaosha based on the features of the latter's net cafes.

In addition, they will cooperate on technology, sales channels, service and resources.

It is this chip, board and system pipeline, in part, that Intel's China fab would supply, although it is not a forgone conclusion that Intel will build the plant, or that it actually needs U.S. government approval. A debate is already underway over the applicability to the Intel China fab of the Wassenaar Arrangement, a successor to NATO's Cocom regulations designed to restrict foreign access to American technology.

Some observers are asking a more pointed, perhaps less legal, ethical question about Intel's plans and intentions and wondering in Googlesque terms: Is Intel evil?

Evil? How?

With big prospects for cashing in on the chip, board, ODM and system, software and Internet cafe businesses, might Intel unwittingly become an instrument of Chinese government policy, media suppression and possibly worse?

China's video game market is closely regulated by the central government, as is the Internet, net cafes and China's entire media industry.

I raised some of the political issues around this matter a few years ago, asking the question: By helping China build its iCafe industry, might U.S.-based companies unwittingly be undermining the goal of advancing human rights and free speech protections in China?

Others have looked even longer and harder at these issues, including Reporters Without Borders which published a "A Chronicle of Repression" that documents China's repressive PC-based Internet policy.