It's fascinating to watch this dispute between Google and China play out, largely because the stories coming from either side seem so different.
First Google says the parties are in "active negotiations," but Chinese officials deny Google has approached them to try sort out the issues. Then Google says the situation will be resolved "soon." The next day, Chinese officials are "warning" Google not to unilaterally stop censoring its Chinese servers. I'm not sure we'll ever really know who said or did what by the time it's all over.
CNET News reports:
Speaking to reporters at the National People's Congress on Friday, Chinese Minister of Industry and Information Technology Li Yizhong said he hopes Google will respect China's rules and regulations. But, according to several press reports, he cautioned the company: "If you insist on taking this action that violates Chinese laws, I repeat: you are unfriendly and irresponsible, and you yourself will have to bear the consequences."
Presumably, the "action that violates Chinese laws" would be Google's decision to stop filtering search results to avoid the things that the government has deemed inappropriate, which can be "anything from pornography to political debate," according to CNET.
Whether it closes Google.cn or not, it's unlikely the company will leave China completely, but deputy general counsel Nicole Wong told the U.S. House Foreign Affairs Committee this week that Google is "no longer willing to censor its search results."