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Clearly Google is searching for a way to do business in China that avoids them sending someone to jail over an e-mail.

I don't think any foreign Internet company can effectively compete against Chinese companies in the Chinese market. The regulatory environment is so difficult that it's almost impossible for foreigners to have an advantage over locals who have better political connections and who can manipulate the regulatory system much more effectively.

Let me start with Yahoo. As we meet today, a Chinese citizen who had the courage to speak his mind on the Internet is in prison because Yahoo chose to share his name and address with the Chinese Government.

The user in China wants the same thing that any Internet user wants - privacy in conversations, maximum access to information, and the ability to speak their minds online.

China's Web has grown away from just duplicating services from the U.S.

You have Google, we have Baidu. You have Twitter, we have Weibo. You have Facebook, we have Renren. You have YouTube, we have Youku and Tudou. The Chinese government blocked every single international Web 2.0 service, and we Chinese copycat every one.

So rather than face the bitter truth, China has placed severe restrictions on the Internet and enlisted America's high-tech companies as their Internet police.

The Chinese government still would like to see U.S. Internet companies explore the Chinese market, providing they are willing to abide by Chinese law. I think companies like Facebook should think about the Chinese market.

It seems pretty clear that the Internet has an important economic role to play for China as it reaches out to the rest of the world.

The Internet was invented in America but has found its largest number of users in China.