The Chinese government appeared to be retaliating against Google Inc. for its decision this week to stop censoring search results in the country's mainland, further stoking tensions among U.S. businesses already irked by the country's increasingly bold and nationalistic tactics.

If unchecked, the widely watched episode could tip already fragile trade relations, slowing the expansion of foreign businesses into China and, in turn, checking the nation's meteoric economic development.

"An issue that has been bubbling under the surface for years has now hit the boiling point," said Carl Guardino, chief executive of the Silicon Valley Leadership Group, a trade organization in San Jose. "For the good of the innovation economy and both (countries') national economies, let's hope that both sides can step back, cool down and find a workable solution."

On Monday, Google redirected traffic from its Chinese search engine, Google.cn, to an unfiltered site in Hong Kong, a less-regulated special administrative region of the nation. The move made good on a promise the Mountain View Internet giant made on Jan. 12 to stop censoring search results in China, after revealing that it and dozens of other U.S. businesses were victims of intricate cyberspying that originated there.

Chinese government firewalls quickly disabled searches for controversial topics from the mainland to the Hong Kong site, Google.com.hk, or blocked links to certain results, the New York Times reported Tuesday. Under apparent government pressure, China Mobile, the country's largest cellular communications company, was expected to remove Google's search engine from its service, the newspaper said, citing business executives close to industry officials.

Likewise, China Unicom has halted the rollout of a mobile phone that runs on Google's Android platform while Internet portal Tom.com ceased using Google technology in its search engine.

Skepticism growing

If the actions were in fact all the result of Chinese government prodding, it would fit into a pattern of recent state strategies that have increasingly led foreign companies to question the common wisdom that China is necessary to their growth strategy, said Jock O'Connell of ClarkStreet Group, a Sacramento trade consulting firm.

Key complaints include government policies that increasingly funnel business to state-owned enterprises, force foreign companies to strike joint ventures with local businesses, require access to the companies' propriety technology and undervalue China's currency.

"We've been hearing these kinds of stories now for some time, and there does seem to be a crescendo of adverse news about companies, particularly high-tech American companies," O'Connell said. "It's a very serious situation that's emerging here."

Feeling unwelcome

Indeed, 38 percent of foreign firms said they feel increasingly unwelcome in China, up 12 percentage points from a few months earlier, according to a survey released earlier this week by the American Chamber of Commerce in China. The trend was more pronounced among technology companies, with 57 percent saying they were harmed by government policies and 37 percent saying they were losing sales as a result.

Google's decision marks another in a series of narrowed Chinese ambitions among major U.S. technology companies. In recent years, for instance, both eBay Inc. and Yahoo Inc. handed over control of their operations in the country to local partners.

But some believe the track record to date shows that U.S. companies, on the whole, are more than willing to indulge the Chinese government's self-censorship demands and stacked rules in exchange for the chance to break into the world's most populous marketplace.

"Most businesses seem to take the attitude, based on their public pronouncements and actions thus far, that the Chinese government can take advantage of them in any number of ways," said Alan Tonelson, a research fellow focused on China at the U.S. Business and Industry Council, which represents U.S. manufacturing companies. "They've convinced themselves that they're making so much money now that it's worth it, or the prospective market is so big that they can't afford to ignore it."