http://www.fas.org/nuke/guide/china/dod-2003.pdf
The report I found is from July 2003! Gee, ya think maybe this is a bad source? Yeah, pretty much...
In addition, China already may possess the capability to damage, under specific conditions, optical sensors on satellites that are very vulnerable to damage by lasers. Beijing also may have acquired high-energy laser equipment and technical assistance, which probably could be used in the development of ground-based ASAT weapons. Given China's current level of interest in laser technology, Beijing probably could develop a weapon that could destroy satellites in the future. Although specific Chinese programs for a laser ASAT system have not been identified, press articles indicate an interest in developing this capability.
China is believed to be conducting research and development on a direct-ascent ASAT system that could be fielded in the 2005-2010 timeframe. Scholarly articles published by Chinese scientists in technical journals have reported indigenous research on "space interceptors," which they say can be used to destroy targets in space. June 2002 Chinese magazine article suggested that China should “concentrate on intensifying research of the key technologies in anti-satellite weapons that attack ground and space bases (especially ground bases), and as quickly as possible develop one or two anti-satellite weapons that are useful as a deterrent against enemy space systems, in order to gain the initiative in future space wars.” A Hong Kong newspaper article in January 2001 reported that China had developed and tested an ASAT system described as a “parasitic microsatellite.” Although this claim cannot be confirmed, a number of countries, including China, are developing and proliferating microsatellite (10- to 100-kg mass) and nanosatellite (1- to 10-kg mass) technologies. 36
Not sure you read your own source. Page 36/37 confirms that the Chinese were developing anti-satellite (ASAT) lasers in 2003.
Looks like a good source to me - and the Telegraph ( and mucho muchacho) got it right.
or perhaps I just don't get your brand of sarcasm?