Interesting story. China has 2 main Moslem groups:
1. Chinese Moslems - these are Chinese-speaking, ethnic Chinese Moslems, I don't recall the percentage of the population they comprise, but certainly they are a minority. Non-Moslem ethnic Chinese are called "Han." Moslem ethnic Chinese are called "Hui." The "Hui" are scattered around China, and traditionally have not been strident in their observance of Islam.
2. Non-Chinese Moslems - these are the ones who were the subject of the article linked to in Islam is Cancer's post. The "autonomous region" of "Xinjiang" in Western China is basically just another one of those "Stans" that emerged from the breakup of the Soviet Union, except that (1) it's located across the border in China, whose government did not collapse, and hence it did not become independent and (2) the Chinese Government has been encouraging "Han" Chinese (see above) to move to Xinjiang and Tibet so that gradually these regions will become majority Chinese, the indigenous peoples will be absorbed into the Chinese population and the regions will be integrated culturally, linguistically and ethnically into China.
Sound far-fetched? How do you think China got so big in the first place?
Kalman Ben Menachem