Google moves China search service to Hong Kong

SAN FRANCISCO (Reuters) - GOOGLE (GOOG.NQ)moved its China Internet search service offshore to Hong Kong on Monday, in a bid to provide uncensored search results while still maintaining some business operations in the country.

Google said traffic to its mainland Chinese search site google.cn is being redirected to google.com.hk, following unsuccessful talks with Beijing about operating an uncensored search engine in the country.

The move comes amid heightened tensions between China and the United States over a range issues from Internet freedom to the yuan exchange rate, from economic sanctions on Iran to U.S. weapons sales to Taiwan.

"The Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement," Google said in a post on its official Web blog on Monday.

Google said that it intends to continue research and development work in China and maintain a sales presence there, though the size of the salesforce will be partly dependent on the ability of mainland Chinese users to access google.com.hk.

A former British colony, Hong Kong is a special administrative region of China and enjoys more freedom, including an uncensored Internet, than mainland China.

Google had flagged its intention to withdraw from China, the world's largest Internet market by users, in January when it said it had detected a sophisticated cyber attack on its computers that it traced to China.

Internet censorship has become a source of tension in Sino-U.S. ties, with Secretary of State Hillary Clinton calling in January for worldwide Internet freedoms and singling out China among a few other countries. Several U.S. senators formed a caucus to promote online freedom.

Google generates a small portion of its nearly $24 billion in annual revenue in China, where the company lags home-grown search powerhouse Baidu Inc in market share. But China represents an important growth opportunity for Google, which has seen its growth slow in mature markets like the United States and Western Europe.

Google said on Monday its decision to re-route traffic to an uncensored Hong Kong site in simplified Chinese that is specifically designed for users in mainland China is "entirely legal."

But the company acknowledged that the Chinese government could at any time block access to the services, which include Google search, news and images.

(Reporting by Alexei Oreskovic; Editing by Tiffany Wu and Richard Chang)