China appears to be preparing for Google departure

By John Pomfret
Wednesday, March 17, 2010

BEIJING -- The Chinese government on Tuesday appeared to set the foundation for Internet giant Google to pull out of the country, with one spokesman contending that the company's potential departure would be an "individual business act" and another warning Google to obey Chinese law whether it leaves China or not.

The comments -- by the spokesmen for the Ministry of Foreign Affairs and the Ministry of Commerce -- followed strong indications that Google, which has been locked in a dispute with the Chinese government over censorship, was preparing to leave China.

Chinese online advertisers are advising their clients to switch their accounts to Google's Chinese competitor, Baidu. And government officials from several ministries have privately predicted that Google soon would shut down its operations.

Shares of Google fell nearly 3 percent in regular trading Monday to close at $563.18, Reuters reported. Shares of Baidu, the No. 1 search engine in China, rose 4.8 percent, to $576.84.

In January, Google announced that it would stop censoring its Web searches in China, in violation of Chinese government regulations. Google started operations in China in 2006 and has been censoring search results ever since. China routinely blocks Internet content, shutting off access to sites such as Facebook, YouTube and Twitter. Negotiations have occurred between Google and the government about how to resolve the impasse, but apparently no progress has been made.

Google's plans to stop censoring searches shocked the Western business community in China, which has long avoided publicly confronting the Chinese government on issues such as censorship, copyright infringement and corruption -- all of which bedevil Western businesses in the communist country. That said, many Western businessmen have said privately that they are rooting for Google and looked at the case as an important sign about China's direction on questions of individual freedoms.

To that end, Qin Gang, a spokesman for the Ministry of Foreign Affairs, on Tuesday dismissed the importance of Google's possible withdrawal.

"It will not undermine China's investment environment or most of the foreign companies including U.S. companies' business in China," Qin contended at a news briefing in Beijing. Earlier at the Ministry of Commerce, spokesman Yao Jian warned Google that no matter what it did, it should follow Chinese law. Yao seemed to be attempting to ensure that Google not make any rapid moves.

"We hope that whether Google Inc. continues operating in China or makes other choices, it will respect Chinese legal regulations," Yao said.

"Even if it pulls out, it should handle things according to the rules and appropriately handle remaining issues," he added.

China's leadership was alarmed by Google's announcement in January and its open accusations that hackers from China had attacked prominent Western companies and the e-mail addresses of Chinese human rights activists. China's state-run media soon portrayed the affair not as a clash over freedom but as an American plot to divide and contain China.

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