Joe McDonald with the Associated Press, today reported:

China’s top Internet regulator insisted Friday that Google must obey its laws or "pay the consequences," giving no sign of a possible compromise in their dispute over censorship and hacking.
"If you want to do something that disobeys Chinese law and regulations, you are unfriendly, you are irresponsible and you will have to pay the consequences," Li Yizhong, the minister of Industry and Information Technology, said on the sidelines of China’s annual legislature.

That’s a position that has no room for negotiation.

Yet Eric Schmidt, CEO of Google, earlier this week was reported by Jerry Dicolo at the Wall Street Journal, saying, "We are in active negotiations with the Chinese government." He added that "something will happen soon."

What are they negotiating over? The Chinese position is crystal clear: we’re not budging.

It has been two months since Google threatened to leave China as a response to attacks by hackers it said were agents of the Chinese government. It said it would stop censoring Google search results in China.

Li Yizhong told the AP that China will continue to censor Internet content for the public good.

"If there is information that harms stability or the people, of course we will have to block it," he said.

The Chinese government has repeatedly denied that it was the source of the hacker attacks on Google and has said it would severely punish any Chinese hackers but that Google had not made an official complaint, or provided any evidence.

Foremski’s Take: It looks as if Google has painted itself into a corner in China. By saying it will stop censoring its results and that it may have to leave China, it has left itself with no options. Negotiations with the Chinese government have produced no compromise from the authorities.

It’s interesting to speculate what those negotiations could have been about. What could Google offer in return for being allowed to stay in China but not censor its search results?

The Chinese authorities are far more skillful in these types of situations than Google’s leadership.

Will Google still maintain research, and sales operations in China, but withdraw its search service? What about its other products such as GMail, etc? Will Google’s spiderbots still index Chinese web sites?

Leaving the world’s largest and fastest growing Internet market is a serious blow for Google, especially if it turns out that the hacker attack was not of Chinese origin.