China relents, allows Google to run search engine

Shanghai/New York: China gave Google approval to keep operating its Chinese search page, resolving months of dispute over censorship that had threatened the company's future in the world's top internet market.

The move, announced by Google late on Friday, removed another thorn in US-China relations and reflected Beijing's desire to be seen as friendly to major foreign companies in spite of ideological differences, analysts said.

The news erased some fears that China would eject the company for taking a hard line against internet censorship.

But analysts said Google's position in China remained fragile and that the country would account for a fraction of Google's revenue for some time.

"It's good for Google that they still have some presence. But they're clearly in a more compromised competitive position," said Ryan Jacob of the Jacob Internet fund, which holds Google shares.

"Google is going to have a very difficult time gaining share, and will probably lose share over time."

Google embarrassed China in January by drawing global attention to Beijing's internet censorship practices, a function of the government's belief that keeping a tight grip on information helps it maintain control.

The internet company also accused Chinese hackers of orchestrating a sophisticated cyber attack on Google and other major US companies.

Google then declared that it was no longer willing to offer censored search results.

This exacerbated tensions between Washington and Beijing, which were also sparring over China's currency, US arms sales to Taiwan, and Tibet.

Washington has forcefully argued against internet censorship and demanded that Beijing investigate and explain the alleged cyber attacks.

Analysts said that while the United States would likely welcome the Google agreement, deeper divisions over freedom of information, internet policy and cyber security would likely continue.