On ICSR's blog 'Jihad in China', which opens with;
Islamist terrorism and extremism in China is a very difficult subject to research. A general sense of paranoia casts a shadow over the it and a great paucity in direct and accurate information means that people often have very little that is empirical or tangible to add.

None of this is to say that the problem does not exist.

(Ends with)It seems that there is some sort of a terrorist threat to China from violent Islamist networks. But what remains unclear is to what degree this threat is able to conduct any sorts of operations within China or to what degree al Qaeda and affiliate networks are able (or want) to manipulate it for their own ends. Currently, the jihad in China seems more aspirational than operational. At the same time, if events in Hotan are confirmed, it looks like the tinderbox of ethnic friction and disenfranchisement that might offer an outlet for such extremism to latch on to continues to exist.
Link:http://icsr.info/blog/Jihad-in-China