Google's China compromise stuns observers

When Google dropped the bombshell in January that it would no longer self-censor web searches in China, the Internet company set up that rarest of spectacles - a public fight between Beijing and a foreign company. The view in most business circles in China, as well as among China watchers in the west, was that the only winner in such a confrontation would be the Chinese government.

"One rarely gets very far with China by direct confrontation," says Orville Schell, head of the Center on US-China Relations.

It was an approach that left many observers - including Google's allies at home in the technology and Internet industries - scratching their heads: why had the Internet company touched off a needless public fight it could not hope to win? That prediction seemed to have been confirmed when Google last month said Beijing had rejected its compromise of redirecting Chinese search users to Hong Kong, where it operates beyond the reach of the censors, and had so far declined to renew its operating licence. Without the licence, it seemed likely Google would end up closing all its operations in China, losing a foothold in the world's most populous Internet market. Yet, the announcement yesterday, through another Google blog post, that China had renewed its Internet content provider licence, suggests that confrontation has been followed by compromise. "In the second go-around there has been a much more artful dance on both sides," Mr Schell says. "Both sides realized they had something to win - and lose."