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This article uses a number of mainland China case studies from 2009 and 2013 to investigate specific social and political conditions that both enable and limit the power of the Internet in an authoritarian society. Drawing on German scholar Jürgen Habermas’s thesis of the public sphere, we argue that the digital revolution has the potential to create a kind of “virtual public sphere,” a realm relatively independent of both the state and dominant corporate economic institutions. However, the full exploration of the democratic function of this virtual public sphere depends upon its interplay with the real world and is conditioned by actual political and social structures. Therefore, this virtual sphere is a battleground upon which both the state and online democratic forces negotiate power and strive for the control of discourse.