Liu was granted medical parole in May after he was diagnosed with late-stage kidney cancer.
"If a Nobel Peace Prize laureate dies in detention, it would batter China's image but only be a short-term political hit", said Mo Zhixu, a dissident writer who is friends with Liu.
The hospital says Liu, China's most prominent political prisoner, has respiratory failure and his condition is now life threatening.
However, in a subsequent statement that was ignored by Chinese media, the German and American doctors said Liu was capable of traveling overseas, and the German Embassy in Beijing lashed out at China for "selectively leaking" the video to state media in a breach of doctor-patient confidentiality. He was sentenced to 11 years' jail on subversion charges but was awarded the Nobel Peace Prize in 2010.
China has in the past released high-profile dissidents on medical grounds and immediately exiled them to the United States, notably veteran democracy campaigner Wei Jingsheng in 1997 and a leader of the 1989 student pro-democracy protests, Wang Dan, in 1998.
Liu's plight has already drawn public protests in the southern Chinese city of Hong Kong.
Human Rights Watch's China director Sophie Richardson called the leak "grotesque propaganda".
Hu Jia, a dissident and friend of Liu's, said he was deeply saddened to hear the news of his worsening condition but vowed to do all he could to push for Liu's freedom.
The First Hospital of China Medical University said Liu is also suffering from low blood pressure and that an MRI scan revealed growing cancer lesions.
Meanwhile, the state-run Global Times tabloid issued another scathing editorial on Wednesday, describing Western appeals to have Liu transferred overseas for treatment as "hypocritical".
In 2008 he was arrested for spearheading Charter 08, a pro-democracy manifesto that called for ending authoritarian rule in China.
As China's government faces mounting worldwide pressure to grant Liu his wish to leave the country for treatment, information control is a familiar strategy.
While it is good that the hospital has given health updates, "at the end of the day it's the Communist party that's making decisions about Liu Xiaobo's health, not the physicians", she said.
Amnesty International's China researcher Patrick Poon voiced fears that Liu will die in custody.
"The primary thing we need is approval of the Chinese government to let them go and the issuance of passports for them", Genser told The Associated Press.
The German Embassy in Beijing complained on Monday that authorities recorded the meeting between the doctors and Liu without the consent of the German side and later leaked some carefully selected parts of it to the Chinese media.
"It seems that security organs are steering the process, not medical experts", the embassy said.
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