The grass mud horse meme didn't start with Ai. The New York Times ran a good 2009 explainer on the meme shortly after it first became big on China's web as a symbol of "impish protest against censorship." The word caonima, in Chinese, sounds similar to a certain insult we won't reproduce here. Chinese web users might reference the animal as a way to defiantly force censors to choose between allowing the insult through or taking the somewhat ridiculous step of censorship references to a cute animal popular on children's cartoons.
The meme has been a recurring theme for Ai, who typically uses it to challenge the Chinese Communist Party. In 2009, he posed semi-nude with a stuffed caonima over his genitals; the photo's title "Grass Mud Horse Covering the Middle" (photo and title explanation here; warning: strong language) was perceived as a direct and obscene insult to senior party officials. Some China-watchers suspect this may have played a role in his 2011 arrest.
After he was released, he sang about grass mud horses (video above; English subtitled version here; same warning about language) to thank the concerned fans who'd sent him money, often in small amounts, to help him pay a punitive fine imposed by Chinese officials.
Ai wrote a post titled "All That's Left is Grass Mud Horse" in 2009, translated by China blogger Charlie Custer. Here's one section:
In sixty years, [I] have never seen a ballot. There isn’t education for everyone, there isn’t medical insurance, there’s no freedom of the press, there’s no freedom of speech, there’s no freedom of information, there’s no freedom to live and move where you choose, there’s no independent judiciary, there’s no one supervising public opinion, there are no independent trade unions, there’s no armed forces that belongs to the nation, there’s no protection of the constitution. All that’s left is a Grass Mud Horse.
Another China blogger, Anthony Tao, thinks that Ai's "grass mud horse" routine is getting stale with his Gangnam parody. Here's Tao's post, setting up and then knocking down the most obvious interpretation of the parody's significance:
One might be tempted to argue that Ai Weiwei, meta genius that he is, is giving the middle finger to Chinese authorities who desperately want to push soft power. By not creating substance, even though he is in a prime position to do so, he is telling viewers that creativity cannot be forced, and certainly cannot be pushed by the government.But it’s only on YouTube, broadcast to everyone except those in China. No, Ai Weiwei is not saying F-U to Chinese authorities, or censors, or anyone here. He’s merely refilling his cache of cool with the Western world, reminding his Western fans and Western journalists that he’s a good guy who “gets it.” He gets it because he knows how to dance on an invisible horse, and hey, that’s something you like, right?
Or maybe he was just having some fun.