Update – March 13, 2010: The other shoe has dropped … The Financial Times is reporting that Google will indeed terminate their search business in China as talks with authorities have reached an “impasse;”
Google has drawn up detailed plans for the closure of its Chinese search engine and is now “99.9 per cent” certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to a person familiar with the company’s thinking.
Netizens pay their respects to Google China - Jan 13, 2010
In a hardening of positions on both sides, the Chinese government also on Friday threw down a direct public challenge to the US search company, with a warning that it was not prepared to compromise on internet censorship to stop Google leaving.
The signs that Google was on the brink of closing Google.cn, its local search service in China, came two months after it promised to stop bowing to censorship there. But while a decision could be made very soon, the company is likely to take some time to follow through with the plan as it seeks an orderly closure and takes steps to protect local employees from retaliation by the authorities, the person familiar with its position said.
Eric Schmidt and Kai-Fu Lee in happier times for Google in China
March 12, 2010: In the wake of the recent Google/China cyber-hacking scandal, there had been some speculation that a compromise with Chinese authorities might allow Google to continue its “search” business in China. Google CEO Eric Schmidt was quoted in the WSJ earlier this week: ”We are in active negotiations with the Chinese government.” Schmidt added “something will happen soon.”
Li Yizhong, Vice Minister MIIT, surrounded by journalists in Beijing - March 12, 2010 - China Daily
Well “something” did happen, but it may not have been what Google expected. China’s Ministry of Industry and Information Technology (MIIT) announced today (March 12, 2010) that there will be no change in China’s Internet censorship policies and Google must comply with State “filtering” mandates (i.e. removing links to banned sites). According to MIIT Vice Minister Li Yizhong;
If you want to do something that disobeys Chinese law and regulations, you are unfriendly, you are irresponsible and you will have to pay the consequences.” Li Yizhong added “If there is information that harms stability or the people, of course we will have to block it.”
The next move is up to Google. Will Google shutter their China offices and abandon the “search” business in China to rival Baidu.com? The last statement (March 11, 2010) from a Google China spokesperson suggested that there were no plans to cease operations in China; “we are still at normal.”
Google’s Android business to hold down the fort in China
Despite the line being drawn in the sand on “search” (no change to China’s rules for Google) China’s mobile carriers do not want to abandon their use of customized Android mobile operating systems (e.g. OMS for China Mobile) and nor is there any plan to give up on Android handsets (e.g. OPhones). 
Yet Google’s expression of outrage over the cyber attacks and their direct affront (so perceived by China), cannot help their future position in mobile in China.
Apple’s suit against HTC will also have repercussions on Android’s future in China and globally. While Apple’s patent litigation did not name Google, many of the named infringements clearly targeted Android. This legal action will take a many months, if not years to resolve, but it’s something to watch with interest.
