* China sets stage for Xi to stay in power indefinitely
* Some on social media say China becoming like North Korea
* State media launch propaganda push to support decision (Adds U.S. president, paragraphs 13-17)
By Ben Blanchard and Michael Martina
BEIJING, Feb 26 (Reuters) - China's plan for President Xi Jinping to remain in office indefinitely has sparked social media opposition, drawing comparisons to North Korea's ruling dynasty and prompting a Hong Kong pro-democracy activist to accuse it of creating a dictator.
The social media reaction late on Sunday quickly saw China swing into a concerted propaganda push by Monday, blocking some articles and publishing pieces praising the party.
The ruling Communist Party on Sunday proposed to remove a constitutional clause limiting presidential service to just two terms in office, meaning Xi, who also heads the party and the military, might never have to retire.
The proposal, which will be passed by delegates loyal to the party at next month's annual meeting of China's largely rubber-stamp parliament, is part of a package of amendments to the country's constitution.
It will also add Xi's political thought to the constitution, already added to the party constitution last year, and set a legal framework for a super anti-corruption superbody, as well as more broadly strengthen the party's tight grip on power.
But it seems the party will have its work cut out trying to convince some in China, where Xi is popular thanks in part to his war on graft, that the move will not end up giving him too much power.
"Argh, we're going to become North Korea," wrote one Weibo user, where the Kim dynasty has ruled since the late 1940s. Kim Il Sung founded North Korea in 1948 and his family has ruled it ever since.
"We're following the example of our neighbour,' wrote another user.
The comments were removed late on Sunday after Weibo, China's answer to Twitter, began blocking the search term "two term limit".
In an unusual step amid intense international media attention, China's foreign ministry, which normally only comments on diplomatic matters, said amending the constitution was a matter for the Chinese people.
Since 1954, when the constitution was first adopted, everybody can see that it has been "continuously improved", spokesman Lu Kang told a daily news briefing.
"I hope everyone can acknowledge the voice of all the Chinese people."
The U.S. State Department did not immediately respond to a request for comment on the proposed constitutional changes, but speaking at a White House event on Monday, U.S. President Donald Trump heaped praise on Xi for his help on North Korea.
"I think that President Xi is unique," Trump said, highlighting his personal relationship with the Chinese leader, but making no mention of the proposed changes.
"China has really done more probably than they've ever done because of my relationship - we have a very good relationship," Trump said. "We have a very good relationship. But President Xi is for China and I'm for the United States."
Trump has had a complex relationship with China since taking office last year, repeatedly threatening tough action against Beijing over trade and putting the countering of China, as well as Russia, at the center of a new defence strategy announced last month.
At the same time, Trump has gone out of his way to personally praise Xi and stress the importance of their close personal relationship built up in one-on-one summit meetings.
China's widely read state-run newspaper, the Global Times, said in an editorial the change did not mean the country's president will stay in office for ever, though it did not offer much explanation.
"Since reform and opening up, China, led by the Communist Party, has successfully resolved and will continue to effectively resolve the issue of party and national leadership replacement in a law-abiding and orderly manner," it said, referring to landmark economic reforms that began four decades ago.
The party's official People's Daily reprinted a long article by Xinhua news agency saying most people supported the constitutional amendments, quoting a variety of people proffering support.
"The broad part of officials and the masses say that they hoped this constitutional reform is passed," it wrote.
The WeChat account of the People's Daily, after initially posting a flurry of positive comments under its article, then disabled the comments section completely late on Sunday. It was back again by Monday, complete with remarks lauding the party.
The overseas edition of the same paper's WeChat account removed entirely an article focusing on the term limits, replacing it with the lengthy Xinhua report summing up all the amendment proposals.
In one confusing moment for many Chinese, Xinhua initially only reported the news in English.
Jokes have also circulated on social media. One shows a picture of a condom in its wrapper under the words "doing it twice is not enough".
Others shared pictures of Winnie the Pooh, an internet meme that plays on Xi's supposed likeness to the rotund cartoon bear, an image censors have repeatedly tried to remove.
Parts of the stock market took heart from the news. Chinese speculators pounced on stocks with "emperor" in their name on Monday.
The decision has also unsettled some in the Chinese territory of Hong Kong, where authorities have been trying to rein in a pro-democracy movement.
"This move, which would allow for a single individual to amass and accumulate political power, means that China would again have a dictator as her head of state - Xi Jinping," said Joshua Wong, one of the movement's leaders.
"The law may exist in China in form, but this just proves that the Chinese law exists to serve the individual and the party's purposes."
China is likely to see any such criticism as a plot against the party.
"Every time China deliberates on reforms and key decisions, effect on public opinion is worth pondering," the Global Times wrote. "Misinformation and external forces' meddling will affect public opinion in China."
Still, on China's streets, there was some support for Xi staying on.
"I think in our country, nowadays, many policies, such as deepening reforms, need more continuity," said Beijing resident Zhao Yisu, 42. "Particularly in politics, I believe stable leadership is good." (Reporting by Ben Blanchard and Michael Martina; Additional reporting by Reuters Television, and Venus Wu in Hong Kong and David Brunnstrom, Doina Chiacu and Roberta Rampton in Washington; Editing by Michael Perry, Clarence Fernandez and Paul Simao)