Not so sure about that tennis match Doug. Web technologies have already shown themselves to have a lot of disruptive power in the context of a command-and-control society like China. I think the Chinese government is going to be very, very unhappy about having Google outside the tent pissing in.
From Google's point of view, I think they simply concluded (probably correctly) that China is a bad actor and the future profit potential is not worth the corollary risks -- economic and "political". Google has a lot to lose from the kind of state-sponsored economic espionage at issue here. I will bet you that none of their real secret sauce (algorithms, custom data center management code etc.) has been allowed to disseminate into the Google.cn organization because of the obvious personnel risks.
I think we're seeing evidence of a new category of international relations that has been evolving for a while under the radar -- clashes of interests between traditional states and supra-national corporate entities. It will be very, very interesting to see what form hostilities take in these cases!