A report in the Financial Times says Google is "99.9%" sure it will shut down its google.cn search engine and (presumably) close its office there.
The corrupt Chinese government lies, cheats and steals to ensure that Chinese businesses succeed. The stealing of information -- in this case, the theft of Google's all-important source code and search secret sauce -- is at the root of the problem, but co-opting Google into helping the regime violate Article 19 of the UN's Universal Declaration of Human Rights (the right to uncensored information) is also significant for Google.
Google's departure from China would be wonderful news, especially for the Chinese people.
Companies from around the world, from auto manufacturers to KFC have been forced to play ball with the Chinese Communist Party, which rules China. That's no big deal when you're selling greasy chicken. But when your company's sole reason for existence is to provide free and unfettered access to the world's information, "playing ball" with China means censoring information for an authoritarian regime and violating your main purpose as a company.
All Google's "products" are virtual and delivered online, with the exception of its phones. The Chinese government can impose rules on companies operating in China. But they can't do much about Google offering search and other services in Chinese languages from Mountain View.
If Google "leaves China," it means that the company will be freed from restrictions about censoring information. The Chinese government will, of course, block and censor Google sites. But now Google will be involved in overcoming that "Great Firewall of China" for motivated Chinese citizens.
The move would also put pressure on Microsoft, which has demonstrated an unsettling eagerness to censor information on behalf of authoritarian regimes around the world, especially for the Chinese Communist Party.
Besides, there is simply no way the Chinese government would ever allow Google to gain major market share in China. They intend to fully control what Chinese citizens are allowed to see, and letting an American company with the motto "Don't Be Evil" provide access to the world's information to the Chinese public. It's a rigged playing field anyway.
It looks like Google will actually leave China after all. This is great news.