There were two interesting news stories that greeted me this morning, one talked about Chinese police claiming they foiled an international terrorism cell that was planning to attack Shanghai (and possibly the soccer venue) during the Olympics. At the same time, China has also announced further restrictions on business visas and the government will stop issuing invitation letters until after the Paralympics are over.
A lot of people are angry and frustrated about the visa changes and there are some with valid complaints, though most problems are simply due to the individual's (or their company's) own irresponsibility. While it's easy to blame it all on the Olympics and China's heightened fears, it doesn't take a rocket scientist to figure out there is a reason why the Chinese government should be afraid.
These are only the second Summer Olympics in the Post-9.11 era and with so much terrorist inactivity over the past year or so, one could assume many may be targeting these Games. While China has reason to fear domestic terrorists in Xinjiang, my biggest fear are international terrorism cells. Unlike Athens in 2004, China wants nothing to do with the FBI, though they gave the FBI Director a tour of preparations a few months back and he deemed himself satisfied with China's security.
The Chinese have not faced any threats from international terrorists over the years and its unlikely Chinese security has followed or paid much attention at all to any of those organizations. In any case, they don't have the experience of organizations like the FBI and Interpol in dealing with and stopping terrorists. However, China is always very weary of allowing representatives of other governments on its soil in even the most dire of situations (like after the Sichuan earthquake), let alone allowing a large number of US and European security departments to be on the ground during the Olympics.
Therefore, China's trying to go at it alone and believes that these tightened visa restrictions will help prevent a terrorist attack. If the end result is that fewer foreigners come to Beijing and the Games go off without a security hitch, China will be satisfied. The Chinese seem to believe that the embarrassment of losing visitors is a lot easier to deal with than the embarrassment of a major attack during the Games.