Please note I am usually wrong when I have an opinion on something like this.
But I will call it. Google 1. Chinese government 0.
In brief, SOMEONE in China has been trying to hack Gmail (Google) accounts of Chinese political activists, along with phishing and worms. That, along with censorship of Google within China has annoyed Google to the point where it has issued an ultimatum to China. Chill or we will bolt.
Me calling a win for Google is based on my opinion that Google having been in China for four years and no doubt it is as popular there as it is here, China needs Google more than Google needs China. China wants to be seen as modern, free and progressive. I don't think it can do that without Google.