Clicking around the Washington Post, you stumble onto the types of stories you’d expect a national newspaper to cover, like “Judges free homeowners from foreclosure mess” or “Obama reaches out in Indonesia.” But then you might come across something like “A panda dream that comes true,” a story about young people from around the world becoming “pandassadors” on a panda breeding reserve in China. One of those stories is just not quite like the others. And there’s a good reason. The “pandassador” story wasn’t written or edited by anyone at the Post, but, instead, by China’s state-run English language newspaper, China Daily.

The Washington Post hosts a “paid supplement” section called China Watch on its domain (chinawatch.washingtonpost.com). On the right-hand side of the China Watch logo appears the tagline “a Paid Supplement to The Washington Post.” But beyond that line, there are few visual clues that the stories aren’t written or edited by the Post. (China Daily has run large display ads on the Post homepage directing readers to the section.)

The structure is the same as other Post sections. It has its own sub-categories of content, like business, politics, opinion, and multimedia. The bylined stories can be shared on Twitter or Facebook. You can leave a comment. There are traditional display ads within the section — for China Daily’s own site. In a way, it’s a site within a site, a digital translation of the advertorial insert you might find in a print-edition newspaper. But online, that insert is seamlessly embedded into the the broader publication.

When reached via email, Jennifer Lee, communications manager for the Washington Post, said: “China Watch is a print and online paid advertising section. It is clearly labeled as advertising so readers know the content is not produced by The Washington Post newsroom. China Watch’s advertising campaign runs through September 2011 and will be updated by the advertising department.”

She also noted that this is not the first time the Post has sold a government-backed publication space on their site. The Post has been hosting a section called Russia Now since 2007. Like the China Watch section, Russia Now’s logo includes the line “a paid supplement to the Washington Post.” It’s a product of Rossiyskaya Gazeta, the Russian government newspaper that runs the “official decrees, statements and documents of state bodies.” The “About Us” page on the Post section doesn’t mention that part, but describes the Gazeta as simply “the leading Russian daily.” It boasts publishing headlines in newspapers around the globe.

By comparison, here’s how China Watch is described on its “About us” page:

China Watch, previously known as Reports from China, is a paid supplement to the Washington Post, and is presented by China Daily. The international project started in 1996, and went online in 2010. It selects for the American readers the latest and in-depth news and analysis about China’s business, society and culture.

And here’s the description of China Daily:

China Daily is the national English-language newspaper in China and is one of the most authoritative newspapers in the country. It serves as a key reference point for media and society worldwide. China Daily (US Edition) is the North American version of China Daily. Launched in 2009 and published Monday through Friday, the US Edition was created to provide news about China tailored to the North American readers.

It’s also James Fallows’ favorite state-run publication, which, he notes, is “always touchingly earnest in its surface demeanor but often with a different message underneath.”

That same surface demeanor is everywhere on China Watch (à la “pandassadors”), plus that pro-China propaganda flavor. (Take, for example, a story in the business section about the handful of steps government should take to effectively intervene in the rare minerals industry.) And Russia Now has a similar earnest, upbeat feel (“Young designers freshen Moscow’s catwalk”).

Russia Now and China Daily did not get back to the Lab on a request for comment.

Regardless of whether China or Russia are winning over American readers, the content-as-advertisement strategy is an example of a trend that was around long before the web came along, but that’s been amplified by the financial realities of the digital world: the blurring of lines between advertising and editorial. Forbes recently took some heat after its first corporate-written blog launched. And this spring we wrote about Main Street Connect, a well-funded startup that hopes to make local news profitable by changing the distinction between content and advertising.

In a time when display ads are in what feel like infinite supply, and other traditional sources of revenue are fading away, publishers must experiment with new ways to profit from their content. The question is, will the supped-up advertorial pay off, and, even if it does, will it be worth it?