There is some question as to whether the attack originated from within Google's offices in China. If so, or if there was some inside knowledge used to facilitate the attacks, closing operations in China was significantly strengthen Google's defenses, since they will no longer be exposing internal information to Chinese citizens (apparently) willing to help Chinese government hacking attacks.

It's not that Google is running away from Chinese hackers. Google has some of the brightest engineers in the world. The attack appeared to target some Chinese human rights activists. These people were using Google accounts, likely because Google, similarly, doesn't endorse the practices of the communist Chinese govt., and the attack highlighted the two sides more clearly. Google is simply choosing to be more clear about its stand, even if it costs them revenue.

Reading between the lines, it sounds to me like they suspect the Chinese govt. is tacitly (or perhaps not so tacitly) endorsing the hacking.

My guess is there's a lot more to this story Google's not willing to put in an official statement.

I wonder whether Google has figured out/decided that China is a one way flow of intellectual and strategic resources, and that it does not serve their long term business interests -- which depend heavily on the free flow of information -- to have a significant portion of their activity captured by a regime not just repressive but with its own, over-riding agenda that brooks no competition.

The current events are troubling, but I imagine the decision makers at Google are also looking at the long term implications to their business.

That is to say, even without the current crisis, China as currently governed and managed may be a poor long-term bet for Google. Both in isolation and as part of a world economy still in the process of being defined and subject to influence by decisions such as this.