One section of the Chinese police force - The PSB, controls what tourists and other foreigners are doing on Chinese territory.
Some areas in China are still closed to tourists and huge parts of Tibet are among those.
If you wanna visit the forbidden areas, you can apply for an Alien's Travel Permit at the local PSB. It's not always granted and for some areas it is a requirement to go on a group tour, with pre-booked accommodation and an authorized guide and so on.
In other words: It's a hassle and can be very expensive...and as a cyclist, you hardly wanna bump around in a Land Cruiser, stay in hotels and be part of the "shepherd and the sheep thing".
The alternative is obvious: Go without permits, keep a very low profile and in every possible way try to stay away from the PSB. This can sometimes be a hard undertaking, due to the many checkpoints and "informer towns" where the local population is obliged to report to the PSB if they encounter a foreigner.
What happens if you get caught without a permit in a forbidden area? At best, you pay a fine and/or are put on the next bus out of the area. At worst, your bicycle and other gear can be confiscated and you may get deported.
According to "know-it-all" travelers, backpackers have been put in labour camps, tortured, shot on the spot etc. and many times these stories are rounded up with some dramatic words like: "I have heard that people have disappeared...." I consider these traveler's tales nothing but pure bullshit.
As you can imagine, this can sometimes escalate to a full on cat and mouse game, and the way I see it, it is an extra spice to the adventure and gives the riding another edge...