Honestly, it is impossible to know. That is because each side faces a big choice.
On the Chinese government side, the question is: Do they have any incentive to step back from the brink and accept Google's cosmetic change as a real change of heart or behavior? Google's cosmetic change, in essence, is to stop automatically routing users from the Chinese mainland site Google.cn to the (uncensored) Hong Kong-based site Google.com.hk. Instead, the mainland home page will now have a link which users must click to be taken to the Hong Kong site. Although the results Google gives on the Hong Kong site are not "filtered," they must pass through the Chinese "Great Firewall" on their way back to users in the mainland.
If the Chinese government is looking for a way to resolve the fight, play nice internationally, reduce complaints that it is becoming a hostile environment for foreign businesses, etc, it could decide to view this step as "compliance" with Chinese law. But if, on the other hand, the government is looking for a way to rub Google's nose in the consequences of its defiance and generally assert its refusal to be swayed by outside tut-tutting, it could decide to look through the ruse and revoke Google's license to operate in China, which is due for renewal very soon. (Below: the new Google.CN home page, with link to Google Hong Kong.)
On Google's side, the question is: if it comes to an all or nothing choice about operating in the Chinese market -- "all" meaning genuine compliance with Chinese censorship laws, "nothing" meaning pulling out altogether -- are they prepared, really, to close down all their operations? All 500+ engineers in the mainland? All of the advertising, mobile, and other business operations that have little directly to do with search? When Google first announced this decision, it appeared they could have it both ways: international acclaim for taking a stand for free expression, but still a significant premise in the fastest-growing information market on earth. If they have to choose, which way will they go?
At the beginning of this controversy I quoted a friend in China who said that this could end up as a "win-win-win" situation, for Chinese Web users, Google, and China's technological development -- or "lose-lose-lose," depending on subsequent steps. As a betting man, I am now leaning toward lose-lose-lose. But it will depend on the way these two questions turn out.
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