Once revolution is successful, the government needs religion as an opiate to avert new revolutions -Pan Yue, 2001

Francesco Scisci, from AsianTimes:

...The Chinese leaders realized that the much-feared Christian faiths were not so dangerous after all. In 50 years of communist rule, despite ruthless oppression, Christian

Protestants and Catholics had never staged demonstrations in Tienanmen, as Falungong followers had. In 1989, during the Tienanmen demonstrations, then-bishop Zen from Hong Kong told students in Chinese seminars not to get involved with the demonstrations. This created renewed goodwill among the Chinese leadership for traditional religions and made possible official overtures to the Vatican in 2001 for the normalization of ties with China. In 2001, senior party official Pan Yue wrote an article that redefined theoretical concepts.

He argued, essentially, that Karl Marx had said that religion is the opiate of the people, and thus religion is bad for revolution. But once revolution is successful, the government needs religion as an opiate to avert new revolutions.
The reasoning is crude but fitting for Chinese political thought. It also changed the meaning of revolution from the original Marxist one, entailing a total change of political order, to the Chinese geming, a simple traditional Chinese change of political power. This brought the momentous change of 2007.

On December 18, the party's politburo, the highest ruling body in the country, held a plenary collective study session. It was the second one since the 17Th Communist Party Congress that ended in October last year. For the first time in the history of the People's Republic, the party's top echelons met to discuss a once-taboo subject - religion.
(...)
Now religious personalities were invited guests; perhaps, in the not too distant future, they could become fully fledged delegates to the party congress. That is, the party could drop its ban against religious figures joining its ranks.

Indeed, Hu's keynote speech devoted a paragraph to religion . He said religious people, including priests, monks and lay-believers, played a positive role in the social and economic development of China. Furthermore, Hu did not talk about religions as such, thus establishing a form of respect and non-interference in purely religious affairs. That is, the party is not interested in religion per se, but it values the positive social contribution of religious people.

Here's a frontline video abut the momentum religion is gaining in China but also Goverment resistences against independent churches.