On-line Commentator for The Economic Observer
Translated by Liu Peng
Original article: [Chinese]

The small ripples caused by the Google announcement have now swelled into large waves.

The impact caused by the company's decision to leave the Chinese market on the grounds of the "attacks and the surveillance they have uncovered - combined with the attempts over the past year to further limit free speech on the web," has now gone beyond being a matter discussed at the level of the global Internet industry, but has led directly to negotiations between the US and Chinese governments.

US Secretary of State Hillary Clinton has expressed her "serious concerns," the American Commerce Secretary Gary Locke has also referred to the matter as "troubling" to both the U.S. government and U.S. companies operating in China and a White House spokesman expressed his support for the "universal right of a free Internet."

Similarly, China also reacted quickly to the matter. Wang Chen, director of the State Council's Information Office, stressed that online information is a strategic resource of the state, and that the Chinese government would continue to strengthen its guidance of on-line opinion.

Speaking from a broad perspective, the incident is yet another example of the many cases of Sino-US trade friction that have emerged in the wake of the global financial crisis. However, because Google is, to some extent, a media company, this case differs from earlier incidents such as Coca-Cola's failed attempt to acquire Chinese beverage giant Huiyuan and the numerous trade disputes over tariffs and anti-dumping measures that have followed.

Google's possible departure from the Chinese market is not simply a business decision, and political considerations may have played a greater role in the company's calculations than any consideration of the company's business interests.

It appears obvious that Google's announcement echoes a new proposal that Hillary Clinton is reported to be announcing some time in the near future that is said to be aimed at assisting citizens of other countries gain access to uncensored Internet resources.

We think that despite their standpoints conflicting with each other, speaking from the respective logic of both the Chinese government's and Google's positions, they're both rational.

The influence of the Internet in China has grown rapidly over the past few years, and the Chinese government has taken steps to bring this newly expanding domain under its regulatory control, which has been in line with the strengthening of the usual way in which it supervises public opinion.

In addition, the crack down on inappropriate content has been carried out in accordance with the country's relevant laws.

However, it's also indisputable that Google has acted in accordance with their motto of "don't be evil," choosing to stick with their principles rather than be swayed by business interests.

The fact that both sides have their own well-founded positions, means that despite the intervention of the US government, the three parties will find it very difficult to find common ground on how best to balance the issues of Internet security and the right to free access to the Internet.

Even to the extent that the likelihood of both sides compromising on a fall back position looks small.

In light of the current situation, this is a question of principle with only two possible opposing responses -  there is no middle way.

If the Chinese government decided to loosen its censorship of Google, this would mean that all domestic websites would be entitled to the same treatment, but this would go beyond what could be accepted in terms of the country's policies in relation to the supervision of public opinion.

At the same time, the intensity of Google's criticism of the Chinese government, indicates that it has already given up on the possibility of returning to the Chinese market in the future.

Despite Google's statement receiving a certain level of support around the world, the decision to withdraw from the Chinese market is still a painful one. Although currently the Chinese market contributes little in the way of profits in terms of Google's overall business, future business opportunities and possibilities were likely to be plentiful.

Previously, in order to gain a foothold in China's market, Google had been willing to accede to China's censorship requirements and had been cooperating with China's regulatory bodies on both the matter of filtering pornographic content and also the issue of possible copyright infringements surrounding the Google Books venture.

This willingness displayed the level of importance the company had attributed to the Chinese market.

If Google does leave China, this move would not only hurt the company itself, but, would also be a sad day for the country with the world's largest online population.

The more than 300 million Internet users in China will probably no longer be able to make use of the various kinds of amazing new technology and new products that the world's largest Internet company can offer.

Meanwhile, as Google retreats from China, Baidu will grow to dominate the country's search engine field.

Such a result will not only lessen market competition but even more worryingly, it will not benefit the protection of consumer and advertiser interests.

We only need to take a look at the arrogant and overbearing attitude of the country's centrally-owned monopoly enterprises to know why.

Prior to this, even at a time when they were competing with Google, Baidu's reputation was plagued by questionable practices. Before the launch of the company's new Phoenix Nest online-marketing system, Baidu had become little more than a platform for advertisements, including misleading and fraudulent ones, greatly diminishing its reputation as a supplier of impartial and credible information.

Finally, if the Chinese government takes a tough line in handling the Google incident, it will probably mean that in the future authorities will further strengthen their censorship and supervision of the Internet, domestic Internet companies will also be subject to stricter demands from the regulatory authorities and will not dare to cross the line.

China will no longer have a force that pushes for an open and free Internet environment.

In addition, China's newly-established image as a strong and responsible country will unavoidably suffer as a consequence.

Therefore, accordingly, if Google quits China, aside from Baidu, everyone loses.