In the foreign film distribution racket, you’d be hard-pressed to find a trendier tagline than “Banned in China,” but more often than not it’s a case of false advertising. When “Blind Shaft” hit New York in 2004, almost every review parroted the “Banned in China” line from the film’s press release, giving the impression that the movie was a brave political statement, when in fact it had been denied a release because the director had neglected to get location permits, something that would have nixed a release in America. But Li Yu’s “Lost in Beijing,” which opens today at Cinema Village, really has been banned in China for political reasons, and its producer has been suspended from filmmaking.

“Lost in Beijing” is a privately financed, independent film about two couples crossing paths in modern-day Beijing, starring four major Chinese stars — Hong Kong’s Tony Leung Kar-Fai (“Election”), Taiwan’s grand dame, Elaine Jin, and two of China’s up-and-coming celebrities, Fan Bingbing and Tong Dawei.

A blackly comic indictment of the corrupting influence of money, the film was accepted to last year’s Berlin International Film Festival and received approval from China’s State Administration of Radio, Film, and Television (SARFT) for a November release. It quickly became one of the biggest independent hits of the year but then, just three weeks ago, in an unprecedented move, SARFT canceled the screening license for “Lost in Beijing,” yanked it from theaters, and blacklisted its producer, Fang Li, for two years.

On its Web site, SARFT gave three reasons for its actions: improper promotion of the film, illegal distribution of deleted scenes on the Internet, and the screening of an unauthorized version of the film at the Berlin Film Festival. But Mr. Fang tells a different story.

“This is because of pressure from the top — from a very high level,” he said. “That’s why it has happened before the Summer Olympics. The Chinese Government wants to have so-called ‘clean air.’ SARFT has never wanted to cancel our license; all they wanted is for us to keep it low-key and not create any political events.”

Explaining the one-month lag between the movie’s release and the suspension of its screening license, Mr. Fang says that when deleted sex scenes from a work print of the movie were stolen from a digital editing station and posted on the Internet, they reached the eyes of officials in the Political Bureau, who ordered SARFT censors to take action immediately.

“The censors say this is something they don’t want to do, but it is something no one can stop,” Mr. Fang said. “According to my inside information, they were told they had three days to deal with it. They never even made a phone call or checked with me, and they said it’s too late for me to appeal my suspension. They suggest to me that I just take it.”

Before “Lost in Beijing” could screen at Berlin, SARFT demanded 53 cuts, but when the edited print couldn’t be subtitled in time, Mr. Fang decided to screen the unedited version instead. When he returned to China, SARFT ordered him to write two self-criticisms, which he did, and it then assigned the film a release date. Regarding the improper promotion charges, Mr. Fang says that a local exhibitor used some coded language on its posters to indicate that the movie had sexual content, but stopped one week later at the request of the film’s distributor. Many in China are questioning why “Lost in Beijing” is a victim of a cultural cleanup before the Olympics while Ang Lee’s “Lust, Caution,” which also had its sex scenes edited out only to have them pop up online later, has run into almost no difficulties.

“Ang Lee’s film is a co-production with a State group,” Mr. Fang says. “There is no way they can ban their own industry. So the private sector has to be the victim.” The ban on “Lost in Beijing” has had a chilling effect on the Chinese film industry.

“Everybody was shocked, and everybody is worried about the future,” Mr. Fang said. “We paid so much not just to finish production but to do distribution. This is scary. At the moment, the general reaction is that everyone has become more cautious about films telling modern stories. That’s why so many films are set in ancient China, because that’s safe.”

But Mr. Fang says he will not turn his back on contemporary subject matter.

“This is an exciting time in Chinese history, which is why we should not stop telling stories about today. When we screened ‘Lost in Beijing’ at the Tribeca Film Festival, director Li Yu and I were really happy for an American audience to see what’s happening in China. We all think China has a big hope for the future, but we also have many problems.”

And as for the ban on producing? It’s not quite what it seems in a country where the film market is manipulated to save face and where personal connections are more important than anything else.

“SARFT told me they were giving me the least punishment possible. I have had some open communications with them and basically I am free to do anything I want, as long as my company doesn’t submit a project to SARFT and as long as my name does not appear on the credits.”