China's attempt to control the internet via a client side package known as Green Dam seems to be faltering according to Information Week
Add to that, the software appears to be ripped off from a combination of US software maker Solid Oak and some illegal use of BSD licenced Open Source image recognition software - OpenCV - according to The Register

Futhermore, according to The Register, the Chinese software actually makes calls back to the Solid Oak servers.

To cap it all, Green Dam also is potentially a major security hole, as this Register article points out.

Until a few days ago, this software was supposed to be mandatory on all new PCs sold in China from July 1st. Thankfully the Chinese government have backed down on that decision.
Chinese people are not that stupid. If it is optional, no one in their right mind will install it.

PS If I get time, when I leave China, I will try to install this software on a virtual machine and take it for a spin. It is hard to find the download page though via the maze of Chinese menu items.