Q+A: China-U.S. dispute over Google seen lingering

WASHINGTON (Reuters) - Google Inc moved its China search service to the more free environment of Hong Kong in an attempt to remain a player in the world's largest Internet market without censoring search results.

An angry reaction carried by China's official Xinhua news agency suggested that Beijing has rejected Google's attempt to strike a balance between business interests and the company's commitment to the free flow of information.

The Google dispute, which involves cyber attacks as well as Internet censorship, is just one of many thorny trade, financial, political and security issues that are roiling U.S.-China ties this year.

Tensions between China and the United States have risen over Internet freedom, the yuan currency's exchange rate against the dollar, sanctions against Iran's nuclear program, Tibet, and U.S. weapons sales to Taiwan.

HOW HAVE THE TWO GOVERNMENTS REACTED TO GOOGLE'S DECISION?

The White House voiced disappointment that Google and China could not reach an agreement that would allow the google.cn Web site to continue operating in China.

Mike Hammer, spokesman for President Barack Obama's National Security Council, said the United States opposes censorship and is committed to Internet freedom, but said the bilateral relationship is "mature enough" to handle differences as they cooperate issues of common interest.

U.S. State Department spokesman P.J. Crowley called Google's move a "business decision" to which the government was not a party, but said it would monitor future developments.

China, which has fumed since Google first went public with censorship complaints in January and bristles at U.S. criticism of its information controls, is signaling a tough line over the Internet dispute.

An unnamed official from China's State Council Information Office said Google was "totally wrong" to end censorship of its Chinese-language search portal.

"We firmly oppose politicizing commercial issues, and express our dissatisfaction and anger at Google Inc's unreasonable accusations and practices," said the official.

WHAT CAN THE U.S. GOVERNMENT DO NOW?

While signaling that it would take a hands off approach to the dispute, the State Department's Crowley said "Our interest remains the promotion of Internet freedom as a universal principle."

This stance flows from a key speech in January by Secretary of State Hillary Clinton calling for an unfettered worldwide Internet and criticizing a "new information curtain" imposed by China, Iran, Saudi Arabia and other countries that censored the Internet or harassed bloggers. The speech angered Beijing.

U.S. lawmakers have formed activist "caucus" group and are pushing for legislation to promote online freedom, including by authorizing funds for the development of technologies to help circumvent Internet restrictions.

James Lewis, an Internet security expert at the Center for Strategic and International Studies in Washington, said it was unclear what the U.S. government can do to support Google.

"The government needs to find a way to keep the Chinese as honest in trade as possible," he said. "In this case, it means looking for the nontariff barriers that China might use to punish Google."

But Jack Perkowski, of Managing Partner of JFP Holdings, Ltd., says the best thing Washington can do is try to get the bilateral relationship on track.

"The U.S. government can only make it worse. I would argue that they did make it worse," he said of the Google spat.

WHAT HAS GOOGLE ACCOMPLISHED?

Google did not get its way in running an uncensored search on China, and moved to tiny Hong Kong -- a situation that means mainland users who access its Chinese-language search engine will find it more time-consuming and still susceptible to censorship by China at the national network level.

China trade economist Derek Scissors of the Heritage Foundation called Google's move to Hong Kong "pretty close to a complete exit" that will "provoke Beijing and puts Google outside the firewall with regard to advertisers and other partners."

Whether Google's effort at compromise will work turns in part on whether China continues to allow mainland Internet users to access the Hong Kong site, said Drew Thompson, director of China Studies at The Nixon Center in Washington.

Human rights activists and press freedom watchdogs praised Google for standing up to censorship.

"Google's decision to stop censoring search results will put Google on the wrong side of the Great Firewall. In the long run, however, we hope that it ramps up pressure on the Chinese government to allow its citizens to access the news and information they need," said Committee to Protect Journalists CPJ Deputy Director Robert Mahoney.

Rebecca MacKinnon of Princeton University's Center for Information Technology Policy said Google played the role of "the little boy who pointed out that the Emperor has no clothes" by making more Chinese people aware of censorship.

Had Google flouted Chinese law mandating censorship, it could have made its staff in China subject to prosecution -- "exposing their Chinese employees to conditions that would be hazardous to their health and mental well being," she said.

(Additional reporting by Diane Bartz, Andrew Quinn and Michele Nichols in New York; editing by Philip Barbara)