Some thoughts on the "I'm not defensive, YOU'RE DEFENSIVE! You don't understand our 5000 years of Chinese culture" reactions in this article: US Universities End Confucius Institutes, Chinese Reactions
1.) "You just don't understand Chinese culture" is a surefire sign that you're looking to guilt others into not pointing out your agenda. It's a sign of guilt, not a defense of innocence (in that way it's not so different from "I'm not racist, some of my best friends are ______").
2.) American movies may contain American cultural characteristics but that's not the same as purposefully crafted and disseminated propaganda. And it's stupid to imply that American cultural products never criticize or show America in a bad light.
3.) Sure, the BC and Alliance Francaise exist, but they don't disseminate Western cultural propaganda. You can tell the difference between "promoting culture" and "propaganda" this way: if a political party with an ideology is solely in charge of determining the content of such an institute's promotion, it's propaganda. If many different voices are heard from various parties in determining the content, it's probably not.
4.) "Harmony in diversity" MY ASS. Try telling the Tibetans that.
5.) Another way you can tell the difference between cultural promotion and propaganda is this: go to BC or wherever and ask them about unflattering/bad events in British history. The person you talk to will, while not openly denigrating Britain, will probably be honest with you about what happened and why it was wrong. Go to a Confucius Institute and ask a Chinese teacher about Taiwan or Falun Gong and see the stone-face you get.
6.) As a friend pointed out, Confucius Institutes exist within schools and universities, which are meant to be bastions of academic freedom - so when a government puts limits on what can be said in an entity within such a space, it's a big fat problem - it denigrates academic freedom to not be able to discuss certain topics. British Council and Alliance Francaise exist as independent institutions, and are not affiliated with schools and universities. That right there is a big problem. If the Chinese government wanted to open schools abroad in the same way, through legal means, and insisted that teachers hew to CCP propaganda within them, while Westerners would criticize that, they would be able to do so. If you didn't like it, you wouldn't have to take a class there. You could...enroll in a class at a local university! Whereas with Confucius Institutes in universities, often if you want to study Chinese, you have to go through them.