Nationalism is perhaps the most important current in contemporary political thinking in China. The Western 'party propaganda' view of Chinese nationalism though generally disregards a substantial current within the Chinese debate on nationalism: a highly emotional popular nationalism which at times severely challenges the ruling monopoly of the party state. This analysis tries to give answers to how it was possible that Western anti-China demonstrations led to such outrage and disappointment in China during the Olympic year and what challenges the party state encountered in calming popular passion. The historic perspective from which all foreign actions are suspiciously eyed by the Chinese people is therein of major relevance if attempting to decipher the superiority/inferiority-complex at the core of Chinese nationalism. The present work aims at improving the understanding of power structures and domestic developments in China as well as China's foreign policy decisions.