China fucked up. They had a glorious opportunity to ease up, but they decided to play the party line. (article)
Google is not stupid. Nor is China, even though they look it right now. Look at what Google did thus far in the States, and is doing to spark innovation and progress within The States. If it was not for Google, there would be no serious threat to the iPhone. There would be no new competitor to the Telco/Cable companies. The retail consumer would still be wondering about Cloud Computing. Google can be doing the same there, but China decided to do without it.
Instead China will continue to rely on 2nd rate innovators, and basically copycat competition. (I think Google engineers are the best in the world. So much so, that I think they can take on the NSA, let alone Chinese engineers. I wouldn't want to fuck with them. They know the Internet better than anyone. That is why China should want them in the country to innovate.)
Whatever, Google is better off. IMO, China needs companies like Google, not the other way around. There is very little coming out of Chinese tech companies that is truly unique. I mean seriously now, the only reason why some are market leaders in China is because those companies are given that edge by the hand of Big Brother, not the invisible hand of the free market. I can not think of one Chinese company that has exported a truly unique technology. (The only one that will, but still remains to be seen, is BYD... Buffett's battery investment.)
There is a lot more coming out of Brazil. And that is why I like Brazil the most from all the emerging markets.