The announcement that the US Internet giant might abandon China after a spate of cyber-attacks might also just be good business, as it has never matched up to its local rivals, they say.

"This is a very politically charged environment," Duncan Clark, an analyst at Beijing-based high-tech consultancy BDA, told AFP.

"Multinationals have been complaining about 'Buy China' policies, unfair restrictions and hacking... and this is going to be very damaging if there isn't a solution."

The online espionage against human-rights activists has led Google to reconsider its business operations in China, and it said it would no longer filter Internet search results in the Asian country.

The announcement was applauded by campaigners who had accused Google of trashing its unofficial motto "Don't Be Evil" when it began censoring search results in China in 2006 to appease the authorities.

Beijing tightly polices cyberspace, employing tens of thousands of people to monitor online postings, chatrooms and blogs.

It also requires companies including Google and Yahoo! to block web users from accessing information about subjects deemed politically sensitive such as Tibet and the banned Falungong sect.

When such searches are carried out, some web pages are filtered out by the companies themselves. Other content listed in the search results may be blocked by government censors and cannot be opened.

"There's a feeling that China is emboldened and that they don't need to have the same sort of dialogue (as before)," Clark said, noting Google's decision to go public could suggest the authorities were not open to further talks.

"This is the mismatch -- people here think no one can do without China, and I think now some companies are thinking no one can deal with China."

Beijing-based political analyst Russell Leigh Moses said "the closer Google got to what the Chinese government demanded, the weaker Google looked".

"It is surprising that it took the corporate leadership at Google so long to recognise that their company was no different than any other venture in a market where politics still dominates," he told AFP in an email.

Officials at Microsoft and Yahoo! did not immediately respond to requests for comment on for their own plans in China in light of Google's announcement.

The Chinese government said it was seeking more information about Google's intentions, state news agency Xinhua reported.

To get around the so-called "Great Firewall of China" erected by government censors, savvy web users use proxy servers or VPNs (virtual private networks) to access blocked websites.

On Wednesday, searches for sensitive subjects like the Dalai Lama and Tiananmen revealed photos and results that are often blocked on google.cn, indicating Google may have already stopped filtering.

Elinor Leung, an analyst with Credit Lyonnais Securities Asia in Hong Kong, said the departure of Google China president Kai-Fu Lee in September may have contributed to the deterioration in the firm's relations with Beijing.

She said Lee had been able to "smooth ties with the government" after Beijing accused Google of illegally spreading pornographic content.

On the commercial side, Google has struggled to take market share from its Chinese rival Baidu, holding more than 35 percent of the search engine market in China compared with 58.4 percent for Baidu.

"Its market dominance has reportedly not risen as fast as expected, which may prompt Google to have second thoughts on its initial compromise made to the Chinese government on Internet censorship," said Ren Xianfang, a Beijing-based analyst with IHS Global Insight.

Shaun Rein, managing director of China Market Research Group in Shanghai, said Google might be using the cyber-attacks as an excuse to exit China.

"I think Google is looking for a face-saving way to move out of China," Rein said.

"It hasn't done well in China -- Google in China has been a complete disaster compared with Baidu."

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