Just over a month ago, a smiling Chinese President Hu Jintao launched the Olympic torch relay at a televised ceremony in Tiananmen Square, hailing it as the "journey of harmony". Liu Qi, president of the Beijing games' organising committee, went even further, proclaiming: "The burning Olympic flame will spread the message of peace and friendship and unite all people under one world, one dream."

As the torch returns to Chinese territory this week for the Hong Kong leg of the relay, the image of Olympic harmony has been shattered. Coming a few weeks after riots in Tibet were quashed by the Chinese military, the torch relay was disrupted by demonstrations in numerous world cities. In turn, those prompted angry nationalist counterblasts from many Chinese at home and overseas.

The Olympic torch has long been a symbol, but the added symbolism this year has been clear: attitudes to China are hardening in many countries, while resentment of the west is increasing within China. This is happening among the populace while policymakers in Beijing and capitals elsewhere ponder the tensions that the inexorable rise of China will create.

The events surrounding the torch have helped to drive a wedge between China and large parts of the rest of the world that could make it harder for the west to accommodate China's increasing importance - and could create new domestic problems for China's communist government. "China wants to convince the world that its rise will be peaceful, but a more nationalistic China is something that alarms a lot of foreigners," says Minxin Pei, a China specialist at the Carnegie Endowment for International Peace in Washington.

For much of April, China and the rest of the world appear to have been watching vastly different versions of the torch relay. In many western countries, news coverage has focused on aggressive Chinese military police in tracksuits and dark glasses barking out orders. More recently, it has featured pro-Tibet demonstrators being assailed by groups of Chinese students.

"The torch relay fits neatly into an existing image that a lot of people have in the west of an unchanging China with heavy-handed security forces and a government that tries to control how people think," says Jeffrey Wasserstrom, a history professor at the University of California, Irvine. "People have both positive and negative images of China, but we are moving into a swing where the negative images are predominating."

Anxiety about China has been particularly evident in Europe. The public was alreadyuneasy about China's role in the world, equating the country with intensified economic competition and the offshoring of jobs. But its crackdown in Tibet highlighted China's tough internal politics, creating a new sense of alarm. This hardening of opinion was shown in an FT/Harris monthly tracking poll conducted in Europe's five biggest countries between March 27 and April 8. For the first time, Europeans ranked China as the biggest threat to global stability - ahead of the US, North Korea and Iran.

While criticism has been strongest in Europe and the US, attitudes have also shifted among some of China's neighbours. This is especially true in South Korea, where the passage of the torch was accompanied by confrontations between Chinese students and protesters critical of China's policies towards Tibet and North Korea.

"Anti-Chinese sentiment is growing here after the Chinese students' attack on Koreans on Sunday - and people are getting angrier now that Beijing did not apologise for it," says Han Suk-hee, a professor at Yonsei University in Seoul. "This could be a turning point in Koreans' perception towards China. I think public sentiment could turn from pro-China to anti-China due to this incident."

Elite opinion has also shifted in some places. The events in Tibet, in particular, have prompted many intellectuals to question the common view that China is these days run by a pragmatic leadership who will gradually liberalise the country's political life. In a joint article published in the international press, an authorship as diverse as Václav Havel, former president of the Czech Republic, F.W. de Klerk, the last white president of South Africa, and Jordan's Prince Hassan bin Talal, president of the Arab Thought Forum, even urged the International Olympic Committee to reconsider holding the games in China.

"The reaction of the Chinese authorities to the Tibetan protests evokes echoes of the totalitarian practices that many of us remember from the days before communism in central and eastern Europe collapsed in 1989: harsh censorship of the domestic media, blackouts of reporting by foreign media from China, refusal of visas to foreign journalists, and blaming the unrest on the 'Dalai Lama's conspiratorial clique' and other unspecified dark forces supposedly manipulated from abroad," the group wrote.

China has won praise in recent years for the conduct of its foreign policy, using a quiet charm offensive to quell international concerns. Many low-level disputes with Asian neighbours have been smoothed over during the past decade. Yet if the perception of a more pushy and intolerant China takes hold, such diplomacy will be much harder to conduct.

According to Mark Leonard, executive director of the European Council on Foreign Relations, China tried to live by the slogan of "hide your brightness" for many years but will face increasing international scrutiny as its global economic clout grows. "It is inevitable that people will focus more attention on China and ask more difficult questions given that they [Chinese] are buying more oil from Saudi Arabia than the US and are the biggest foreign investors in Iran and Sudan," he says. "That has only accelerated with the Olympics. China is now living in a goldfish bowl where everything they do is being looked at very closely."

Indeed, cooling attitudes towards China are presenting some immediate problems. Many Chinese companies have been looking to invest heavily in Australia, a country rich in the natural resources China craves. But in recent weeks Canberra appears to have been dragging its heels on approving a series of planned investments by Chinese state-owned companies.

China Investment Corporation, Beijing's new sovereign wealth fund, has to weigh such sentiment when it decides how to apply its considerable finances. Some executives at the fund are pushing for it to hand over a large part of its money to third-party managers to avoid recriminations about the Chinese government taking large stakes in foreign companies.

Just as the protests in Tibet and the torch relay have shifted some western views of China, the same events have served to harden the attitudes of some in China against the west. If the dominant image in western coverage of the torch relay was the military police, in China it has been Jin Jing (left), a torch-bearer in a wheelchair, who was attacked by a protester in Paris wearing a hat with Tibetan colours. The story, endlessly retold on state media, has confirmed the impression of many Chinese that the anti-Beijing protests accompanying the torch were unreasonable and irrational.

The Olympics are hugely popular among ordinary Chinese - a chance for a country that contains more than one in five of the world's population to boost its national pride and showcase its achievements. As a result, the attempts to disrupt the torch relay have entrenched the view held by many Chinese that people in the west are jealous of China's recent success.

Many Chinese are also baffled as to why so many people in the west care so much about Tibet, which they view as a backward and poor place that has benefited greatly from Chinese investment in recent years.

"The most important reason for these boycott threats is that westerners have a lack of knowledge and information about China," says Kang Xiaoguang, a professor at Renmin University of China. "Even intellectuals have a lot of misunderstanding towards Tibet and China, let alone common people. And jealousy for China's development is also involved."

Nationalist indignation among Chinese, both at home and overseas, has been the result, including online petitions and incendiary discussions in internet chatrooms. Carrefour, the French supermarket chain that has 112 stores in China, has faced a series of large demonstrations in dozens of Chinese cities. A number of foreign journalists have also received death threats.

The government, which can no longer fall back on Marxist shibboleths to justify its hold on power, was at first happy to nudge along nationalist outrage through denunciations of the Dalai Lama, attacks on the perceived bias of the foreign media and strongly worded newspaper editorials that have played to a sense of victimhood. "Much of the western criticism of China's human rights record has become discredited in the eyes of ordinary Chinese," says Willy Wo-Lap Lam, a senior fellow at the Jamestown Foundation in the US.

Yet while the domestic reaction to overseas criticism has strengthened the position of the Communist party in the short term, it also poses China's rulers a number of challenges.

The nationalist outrage aggravates fears of a rising China, complicating foreign policy as well as potentially scaring off foreign investors. It could also make the Olympics much harder to manage. The authorities were already bracing themselves for protests by the regime's critics during the August games. If the current level of indignation is sustained, there could also be inhospitable scenes such as the booing of foreign athletes by Chinese spectators - competitors from France, for instance - which the organisers hope to avoid.

Moreover, the Chinese government knows that the targets of nationalist protests can shift quickly - perhaps to high inflation at home or a senior leader perceived to be corrupt. It is no surprise, then, that over the last two weeks, the authorities have tried to damp sentiment, with the People's Daily directing people to express nationalism in a more "rational way".

Last Friday, the government announced it would meet representatives of the Dalai Lama (although that did not stop fierce criticism of the Tibetan spiritual leader in official media), while French government envoys have visited China to try to smooth tensions. Ms Jin, the disabled athlete attacked in Paris, has been invited on a trip back to France.

With around 100 days to go before the games start, there is plenty of time for tempers to cool. Yet the Chinese authorities will be loath to appear weak in the face of foreign pressure. New concerns over human rights or further perceived slights to China's reputation could aggravate the difficulties - and the underlying tensions the torch relay has exposed will remain for years to come.

Additional reporting by Song Jung-a