In remarks sure to irritate his Chinese hosts, Bush prodded the communist nation to grant basic freedoms to its 1.3 billion people and further open its economy.

"We encourage China to continue down the road of reform and openness," Bush told an audience that stayed silent until its polite applause at the end. "By meeting the legitimate demands of its citizens for freedom and openness, China's leaders can help their country grow into a modern, prosperous and confident nation."

His challenge to Beijing immediately followed lavish praise of Taiwan.

"By embracing freedom at all levels, Taiwan has delivered prosperity to its people and created a free and democratic Chinese society," Bush said. Pointing to Taiwan -- as well as South Korea -- Bush said political freedoms are the inevitable product of the kind of economic liberalization China has begun pursuing.

"Men and women who are allowed to control their own wealth will eventually insist on controlling their own lives and their own future. As China reforms its economy, its leaders are finding that once the door to freedom is opened even a crack, it cannot be closed," he said.

Comparing Taiwan and China, even indirectly, raises a major thorn in US-China relations. While US policy recognizes only one China -- including Taiwan -- and opposes Taiwanese independence, Washington is also Taiwan's largest arms benefactor and is bound by the Taiwan Relations Act to help Taiwan defend itself if attacked.

Bush's speech was an attempt to follow through on his inaugural promise to predicate US relations with all nations on their treatment of their citizens -- a pledge that meets its most difficult test with strategic allies such as China, Saudi Arabia and Pakistan.

Still, the call for change in China was not as tough as some on Capitol Hill and among his conservative supporters might want, as it was accompanied by praise on several fronts.

Bush recognized that economic reforms have resulted in a better-housed, better-fed populace, and he lauded China's leadership in the effort to rid North Korea of its nuclear weapons programs.

But while the US president said China should allow people to worship without state control -- a point he hoped to underscore by visiting an officially recognized church while in Beijing -- Bush did not mention China's human rights record.

"The Chinese are not going to like being scolded," said Adam Segal, who studies China at the Council on Foreign Relations in New York. "But if they are of the mind to, they can read it with a positive spin."

Beijing's response was muted.

"Our common points outnumber our differences," Chinese Foreign Minister Li Zhaoxing said.

Schwarzenegger tells PRC students about individuality

AP , BEIJING

In a speech evoking bodybuilding, civil rights icon Rosa Parks and the power of the individual, California Governor Arnold Schwarzenegger urged a university audience in China to emerge from the constraints of their political system and attain success in the global world.

"America is a nation that believes in the power of the individual and what the individual can accomplish -- no matter the color, no matter the religion, no matter the ethnic background of the individual," Schwarzenegger told 500 students at Beijing's Tsinghua University.

"Imagine what could be accomplished if the dreams of China's 1.3 billion individuals can be unleashed," he said.

His reference to Parks, whose refusal to give up a bus seat to a white man sparked the US civil rights movement, suggested that one person could change the practices of an unfair government.

"The small protest of a small woman who weighed less than 100 pounds [45kg] brought down a racist system," Schwarzenegger said of the civil rights icon who died last month. "The individual can make a difference."

Those comments and others offered oblique but clear references of the practices of China's authoritarian government and collective society -- something the Republican governor had not yet touched on in his three-city trade mission.

The students appeared largely unfazed by his message, questioning Schwarzenegger instead about the relationship of acting to politics and his definition of the California dream.

In the speech, Schwarzenegger acknowledged China's global economic emergence and praised its heavy investment in US Treasury bonds. But he also addressed the country's challenges, even touching on its neglect of disabled citizens.

He mentioned a California businessman and philanthropist, Ken Behring, who had helped liberate thousands of Chinese simply by giving them wheelchairs.

While his evolution from musclebound Austrian superstar to politics is well known around the world, Schwarzenegger spoke in unusually personal terms about his humble beginnings and the pain of dashed hopes.

He told students how he cried all night after his first bodybuilding tournament in the US, when he came in second to an American competitor.

He said that this experience motivated him to move to the US and begin his career.

"The bodybuilding gave me the confidence, the movies gave me the money and public service gave me a purpose larger than myself," he said.

Chinese-American indicted for stealing warship secrets

SENSITIVE MATERIAL: An engineer and two of his relatives were charged with trying to smuggle out details about the US navy's newest destroyer

AP , LOS ANGELES

A Chinese-American engineer and two relatives who allegedly conspired to steal sensitive information about Navy warships and smuggle it to China were indicted on Tuesday on federal charges, authorities said.

The grand jury indictment charges Chi Mak, 65, his wife and brother with acting as agents of a foreign government without prior notification to the US attorney general, according to the US attorney's office.

Federal officials said Mak took computer disks from Anaheim defense contractor Power Paragon, where he was lead engineer on a sensitive research project involving propulsion systems for Navy warships.

He and his wife, Rebecca Laiwah Chiu, 62, then copied the information to CDs and delivered them to Tai Wang Mak, 56, who was scheduled to fly to Hong Kong on Oct. 28 with his wife, Fuk Heung Li, an FBI affidavit said.

From there, the brother allegedly planned to travel to Guangzhou, China, to meet a contact.

Ronald Kaye, Chi Mak's defense attorney, said he had not yet seen the indictment and noted his client was presumed innocent.

"He's a man of very strong character, Kaye said.

Tai Wang Mak's lawyer, John Early, had no immediate comment. Chiu's attorney, Stanley Greenberg, said his client was a loyal American citizen and suggested the charges might be trumped up.

"In recent years the government has brought similar charges but when called to proof, those cases resulted in little or nothing," Greenberg said. "I believe this case will follow that same pattern."

All four were arrested on Oct. 28. Though Li was accused in an FBI affidavit of aiding the others, she was not indicted on Tuesday.

Although it is not alleged in the indictment, authorities have said they recovered restricted documents on the DDX Destroyer -- known as the "destroyer of the future" -- that had been produced by the Naval Surface Warfare Center.

Also seized were documents on how to reconfigure a dam-aged ship after an attack, as well as two lists in Chinese that asked Chi Mak to get documents dealing with submarine torpedoes, electromagnetic artillery, early warning technology to detect incoming missiles and defenses against nuclear attack, prosecutors said.