UPDATE: Chinese Government weighs in on Google China exit

China’s foreign ministry spokeswoman, Jiang Yu, said during a press briefing that there is little need for change. “China's internet is open and the Chinese government encourages development of the internet,” she said. "China welcomes international internet enterprises to conduct business in China according to law."

In the statement Jiang added that, "China has tried to create a favourable environment for the internet," and noted that, "China's law prohibits cyber crimes including hacker attacks."

The response has prompted speculation that Google may take the drastic measure of departing from the country sooner than expected. According to one local report citing buzz from within Google China, Google may make its exit within the next two months, and employees suggest that their current work has been halted.

Regardless of rumours, analysts in Greater China are saying that the Government may miss Google for its role as a leading innovator.

“Consumers will suffer from a major lack of choice if the company departs," said Antony Yiu, regional search director for wwwins Consulting and iProspect Greater China. "Baidu has tried to build a mature search advertising system, but it’s not as sophisticated as Google’s and the level of transparency is lacking. Advertisers will have fewer choices. Google may only be getting 30 per cent of China’s search market, but that’s a good chunk of users. These users are highly educated and have high incomes. Google really is getting the cream of the crop while Baidu is the leader and gaining users because of the sheer size of the market.”

According to Duncan Clark, chairman of BDA China: “There are other search players in the market, such as Sohu and other domestic sites, but in terms of innovation, it would be a loss if Google were to leave.”