China's state-run Xinhua news agency launched a new broadside against Google Inc on Monday, saying in an angry commentary that the company had reneged on promises to abide by Chinese law.

Speculation is swirling that Google will soon announce a decision to pull out of China, or at least shut down its Chinese search engine.

The Financial Times, citing a person familiar with the situation, said the company could say on Monday that it will close its Chinese search engine.

Google has not formally unveiled any such plans.

Two months since Google said it would no longer agree to abide by Beijing's censorship rules even if that meant shutting its Google.cn site, some Chinese Internet users and state media are baying for the company to pull out.

Xinhua, in a signed commentary, said Google had promised when it entered the Chinese market to filter its search engine for harmful content, in accordance with the law.

Now Google suddenly wants to break its promise, and if it's not satisfied it will criticize China for a worsening of the investment environment, Xinhua said.

This is entirely unreasonable. What has changed is not China's investment environment. It is Google itself.

The burst of angry Chinese comments suggested that, in spite of the widespread popularity of Google amongst educated Chinese, the government is steering state-run media and websites to lump the company together with other recent disputes with Washington that have stirred nationalist rancor in China.

Get the hell out, wrote one user on the website of the nationalist tabloid the Global Times (www.huanqiu.com), in remarks echoed by other readers.

Ha ha, I'm going to buy firecrackers to celebrate! wrote another, in anticipation of the company confirming its departure from the online search market.

CULTURAL IMPERIALISM

Joseph Cheng, a City University of Hong Kong politics professor, said China's ruling Communist Party was deploying nationalism to stifle debate about censorship.

The criticism of cultural exports, or cultural imperialism, is a kind of defense to justify the Chinese authorities' censorship controls, said Cheng.

In dealing with the American government, the Chinese authorities will try to emphasize that this is only a commercial dispute and has nothing to do with Sino-American relations.

A Global Times editorial cited online surveys as showing 80 percent of respondents said they could not care less if Google withdrew from China, the world's largest Internet market with an estimated 384 million users.

Though Google has remained mum on the progress of talks, the firm's chief executive said earlier this month that an outcome is expected soon.

The Google case has spread beyond censorship and hacking and has become a diplomatic knot in Sino-U.S. relations, already being challenged by spats over Taiwan, Tibet and the value of the Chinese currency.

The United States is studying whether it can legally challenge Chinese Internet restrictions, a top U.S. trade official said recently.

BLOW TO INNOVATION?

Analysts said if Google withdrew from China, the biggest losers would be its millions of Internet users.

With two research and development centres in China, hundreds of sales staff and engineers working on the Google Android platform and other initiatives, analysts said all may come to a halt if Google decides on a pull out.

This is not a good thing for Chinese netizens because Google has been the leader in innovation in the search engine field, said Cao Junbo, chief analyst with iResearch, a Beijing-based research firm specializing in technology matters.

Currently, Google offers Google Maps, Gmail and free music downloads to Chinese users, all of which could be in jeopardy if the company leaves.

Even Google's mobile platform Android is not safe, as Google products such as search which are embedded into the platform will stop working if Google withdraws, making the platform less desirable to consumers, analysts said.

Google's withdrawal will open up China's $1 billion search market to more local firms, Cao said.

The biggest beneficiary will be domestic search leader Baidu Inc, which already has a sophisticated search advertising display system and a robust sales and customer support team.

Others such as Tencent Holdings, China's most valuable Internet company, may also benefit as the firm runs the country's largest instant messaging platform that it could tap into to expand its search network.

(Additional reporting by Stefanie McIntyre in Hong Kong)

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