The way I think liberties get eroded is not that all of a sudden you become an Orwellian state, but gradually it becomes harder for people with unpopular views to speak out without being in danger, be it from the state or just from the majority of the people who don't like them.
If China someday gains a more fair, just, and accountable system of government, it will be due to the hard work and efforts of the Chinese people, not due to the inexorable workings of any particular technology.
It's harder and harder for journalists to get out in the field and interview Iraqis. The Web can get these voices out easily and cheaply.
If you just technically adhere to the law, sometimes that's enough, sometimes it's not; it's really hard to predict. There is definitely a possibility that the Chinese authorities won't find it sufficient.