I don't see the problem with Google producing a "censored" version of its search results for the China. After all, Yahoo have a censored version for France.
If you want to do business, you have to meet the legal requirements of the countries in which you do business. Very often those requirements are stupid and evil. Nearly always they mean you can bring less benefit to your customers than otherwise. All you can do is ask whether your business is in total bringing benefit or harm.
Another example - in the USA, Wal-Mart brings a very wide range of goods at low prices to its customers. Here in Britain, it took over Asda and is doing some of the same things. However, it is restricted. It cannot use the same contracts with its workers as it does in the USA. It must obey Britain's stupid and evil planning laws. It cannot sell firearms. All these restrictions reduce the benefits Wal-Mart can bring to me as a British customer. Should it, therefore, for the sake of morality, refuse to do business in Britain at all? Should outraged Americans boycott Wal-Mart for not stocking shotgun shells in Dunstable? If any are considering doing so, let me say, I appreciate your concern, but I would prefer you to desist.
Of course, there is an enormous difference of degree. Scum that they are, the government of Britain is vastly superior to that of China. And, farce that it always is, the democratic institutions of Britain provide a mechanism of improving the government that is not open to the Chinese. But I do not think these large differences of degree change the equation - Asda brings benefits to me, and Google brings benefits to the Chinese.
That last claim could be disputed - you could claim that in the absence of a censored Google, the Chinese would be forced to search other, uncensored sources for information, and would thereby be better off. But I doubt it.
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