Leading US technology companies will hit back at allegations they are complicit in censoring internet users at a Congressional hearing on the ethics of doing business in China. Western internet firms are rushing to invest in China. US lawmakers last month accused Microsoft, Yahoo, Cisco Systems and Google of giving into pressure from Beijing and censoring websites in violation of American principles of free speech.

China's rapidly expanding online market has become a powerful magnet for foreign investment and for a steady stream of IT professionals from around the world. The country's internet population - some 111 million, 64 million of whom have broadband - is second in size only to the US. Yet the Chinese government enforces strict laws on internet use, blocking content it considers a threat, including references to the Tiananmen Square massacre and notable dissidents.

The row over censorship is proving embarrassing and potentially damaging for companies, who are facing increasing pressure not to conform to Beijing's conditions. Last month Tom Lantos, Democratic head of the Congressional Human Rights Caucus, said there had been "a string of disturbing incidents" in which US-based companies had "caved in to Beijing for the sake of profits". Media watchdog Reporters Without Borders has accused Yahoo of providing China with information that helped identify and convict two internet writers.

Li Zhi was jailed for eight years in 2003, after posting comments that criticised official corruption. Writer Shi Tao, was sentenced to 10 years in prison in April 2005 after criticising human rights abuses.

Google came under fire last month after it announced it would block politically sensitive terms on its new China search site, in agreement with conditions set by Beijing.

The controversy has particular resonance because it concerns the suppression of political expression on the internet, a technology that many users see as an empowering and democratising force - where it is allowed to be.

'Dilemma' of China business

Senior figures from the four internet companies are expected to say that they need governments to work with them to protect the interests of all internet services when they go before the House International Relations subcommittee on global human rights.

In a joint statement issued last month, Microsoft and Yahoo said that they lacked the leverage on their own to influence world governments.

Yahoo spokeswoman Mary Osako told the BBC: "All US and international firms operating in China face the same dilemma of complying with laws that lack transparency and that can have disturbing consequences inconsistent with our own beliefs."

She added: "The choice in China is not whether to comply with law enforcement demands, it is whether to remain in China."

Microsoft founder Bill Gates last month told delegates at the World Economic Forum that state censorship was no reason for technology companies not to do business in China.

Mr Gates said the internet "is contributing to Chinese political engagement" as "access to the outside world is preventing more censorship".

"I do think information flow is happening in China ... saying that even by existing there, contributions to a national dialogue have taken place. There's no doubt in my mind that's been a huge plus."

Chinese use of the internet is also of great interest to policy-makers who are watching the impact of the change in mass communication, especially in the context of China's cultural and political traditions.

Professor Guo Liang, of Beijing's Chinese Academy of Social Sciences, recently published results from his in-depth, multi-year study of internet use in China and its impact on Chinese society.

When it came to the internet and politics, Prof Guo found respondents had very strong expectations that the internet would effect positive change in politics in China.

More than 60% of those surveyed agreed or "strongly agreed" that high-level officials would "better understand the common people's views through the internet".