It is nearly impossible these days to open a national newspaper or magazine in the United States or Europe and not read about the People’s Republic of China. We are deluged with stories covering everything from Chinese sovereign wealth funds and “Great Firewall” Internet censoring to pre-Olympics efforts to clean up Beijing’s air. But for all the attention that the Western media have lavished on China, they have devoted relatively little effort to investigating the evolution of China’s media.

Understanding the Chinese press reveals much about how the Chinese leadership sees the country’s political future. It matters if journalistic outlets are still mostly organs of the Party, or if the Fourth Estate is beginning to break free. The picture that emerges reveals a party-state that is both beleaguered and resourceful—a political elite stressed by the conflicting interests of maintaining control and promoting prosperity. Today’s Chinese press increasingly responds to the demands of a consumer society, even as the Chinese Communist Party (CCP) selects key media personnel and exerts behind-the-scenes influence over media content.

The result is a system in which old-fashioned censorship is rarely needed because stories about China meant for Chinese are shaped by the media elite to conform to the Party line well before they hit the presses or airwaves. Published reports concerning the world outside China come exclusively from central organs, and domestic reporting is shaped by a Party attentive to the need to mold what it cannot completely control, namely, news that reaches foreign audiences about China. Taken together, these methods of media control constitute China’s full court press.

Western social science associates market-based economic growth with the free flow of information, and with political arrangements that protect this flow. Markets need data, so liberalism must accompany capitalism (notwithstanding evidence to the contrary from places like Singapore). This is the lens through which Americans typically view Chinese media. Since China has a market economy, it follows that information must be flowing freely enough to enable the economy to prosper. Although Xinhua is the propaganda organ of the Chinese Ministry of Information, the Google News website treats it as a source akin to the New York Times or the Associated Press. Even some foreign-media analysts in the U.S. government fail to see that Xinhua is used by the Party as a strategic tool.

It was impossible to mistake Chinese sources as even semi-independent in the days when Mao Zedong issued top-level directives about class struggle on the front page of the People’s Daily. (The Sinologist Geremie Barmé, who was a student in Shanghai in the early 1970s, says...