FormerKowloonTonger.
This is an excellent, true analysis of many things today concerning Chinese-Occidental affairs. The media's mostly modestly informed reporters remain blind to this pervasive effect. Google is in this dragon's open maw just now with chewy backside cheeks exposed because it sensed in 2006 that there were uncountable piles of revenue just waiting to be harvested from a market of one billion and counting.
One thing above all needs to be emphasized: "Face" trumps all. Literally everything. Google is about to lose "Face" if it doesn't live up to it's implied threat of getting out of China. The Chinese Internet controllers will loose face if it opens up a bit on this censorship thing. So count on this impasse continuing until someone finds a mutually "Face" saving app.
Caught right smack in the middle are the loyal, idealistic young employees of Google who're marked for life.
They're the ultimate losers.
I wish them luck.