Google on Friday said Beijing has renewed the licence it needs to continue operating a website in China, securing the search giant's foothold in the world's biggest Internet market despite tensions over censorship.

"Google comes out of the deal looking quite good. It looks as though it compromise, but it kept in line with its policy of no evil and it is in line with its general brand reputation of being liberal," said Sarah McDowall, Asia-Pacific Research Analyst, IHS Global Insight.

The renewal of the licence to provide Internet content was in doubt due to the rocky relations between Google and Chinese authorities over hacking of Gmail accounts and censorship of Google search results. Google last week stopped automatically redirecting users in China to its uncensored Hong Kong site after Beijing threatened to withdraw its licence.

"We are very pleased that the government has renewed our ... licence and we look forward to continuing to provide web search and local products to our users in China," said an e-mailed statement by Google's top lawyer, David Drummond.

The statement, which gave no other details, also was posted on Google's blog. There was no immediate statement posted on the website of China's ministry of industry and information technology.

Losing the Chinese licence would have been a significant setback for Google, even though China will only account for a fraction of the company's projected 28 billion US dollars in revenue this year.

China already has nearly 400 million Web surfers, making it the world's biggest Internet market, and usage is expected to rise for years to come.

For Beijing, the renewal partly defuses a high-profile dispute that has added to the perception of China as becoming less welcoming to foreign businesses.

Google closed its China search engine in March but has wanted to keep a website that offers music and other services.

Users had been automatically redirected to Google's uncensored Hong Kong site, but the company stopped that last week after Chinese officials warned the move could mean losing its licence.

Google's relations with Beijing have been rocky since the US search giant said it no longer wanted to cooperate with government Internet censorship.

The announcement was prompted by cyber attacks the company traced to China. The conflict has posed a balancing act for Google. The company wants to uphold the principle of free access to information while also keeping a foothold in the Chinese market.

"The Google - China relationship is something that we're going to have to watch quite closely," said McDowall.

"I think the Chinese government will be watching to see exactly how this you know, development plays out in terms of political stability and if it feels that it is undermining this, which is of utmost importance to the government, then it will act again it potentially won't renew its license in the future."

Google, based in Mountain View, California, does not hold the kind of dominant position in the Chinese search market that it does in the U.S.

The search engine operated by Chinese competitor Baidu Inc. has about 60 percent of the market to Google's 30 percent. MacDowall says that despite the fact that Baidu is running the show, number two Google has opportunity for market gains.

"The Chinese market is a huge growth market and with more developed economies such as the United States internet markets being sort of saturated, the potential for Google to grow in China is huge," said MacDowall.

The licence renewal means that Google will have a chance at expanding other lines of existing business in China: advertising, mapping and the Android operating system for mobiles.

Although Google's China license runs until 2012, it must be renewed annually. The company applied for renewal before the June 30 filing deadline.

In a letter requesting Google's licence renewal, the company's local partner, Guxiang Information Technology Co. Ltd., pledged to "abide by the Chinese law" and "provide no lawbreaking contents," the state-run Xinhua News Agency reported.

Xinhua had reported Google was "very late" in submitting the application. Phone calls to the regulator, the Ministry of Industry and Information Technology, before Friday's news were not answered.

For China, the renewal takes the heat out of a high profile dispute at a time when American and European businesses are changing their once bullish attitudes about the China market and complaining about unfair regulations and other obstacles.

Among the things to look out for in coming months is whether Google services will continue to be featured on new mobile phones in China, Denlinger said. Motorola had in recent months been replacing Google functions with those of its Chinese rival Baidu, he said.

Google opened its China site in 2006 to attract more Chinese users after the government filters slowed their access to its main US site,

China has routinely blocked parts of Google's service such as YouTube. Even without the licence renewal, Web surfers could still reach Google's Chinese-language Hong Kong site by typing in its ".hk" address directly. Industry analysts, though, believed many people would have defected to Chinese competitors such as Baidu.

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