I moved to China a few weeks ago and was amazed how this place is an ideal place for startups/freelancers. First, the cost of living is extremely low AND you get a similar (if not better) quality of life than what you can get in the US. I live in Shenzhen, a very young city with a booming economy and the world's capital of electronics manufacturing. The population density here is much higher than even the largest US cities, which means: a lot of 24/7 restaurants, night clubs full everyday of the week / hour of the night, convenience stores around every corner, cheap taxis (3$US can get you far), etc. There are very few foreigners but it can be a nice thing at the same time because when you see a fellow westerner, you are tempted to socialize very quickly and most of them have interesting stories to tell. Ah, I was about to forget: Chinese girls love westerners.
China is also ideal for startups. The economy here is growing very fast and the domestic market is huge. The software industry here seems to be lagging behind the US by a couple years. This means that people knowledgeable about the western market have a significant edge because they are able to foresee the trends that are likely to take place in China. That's why there are so many Chinese clones of popular western websites.
I could go on and on... Get in touch with me if you'd like to ask some questions.
I'm in a very similar situation. Moved from Silicon Valley to Beijing and haven't looked back. I can only reaffirm what olalonde says - and if you're worried about the GFW, a VPN is a simple workaround.
I'd also point out that China's not just great for techies who want to start a business. If you're interested in a non-wired business, there is a low minimum wage and lots of capital seeking investment here. Plus, earning in RMB means you'll get richer over time vis-a-vis your American counterparts simply due to the yuan's appreciation.
It's pretty straightforward: you buy a 3 months, 6 months or 1 year visa - no questions asked. The 1 year visa costs about 700$ but I believe you can get it much cheaper if you get it from the US. It took a few hours and I bought it at the border of Hong Kong (no visa needed to go to Hong Kong for less than 3 months).
If you are going to move somewhere cheap, while you are working on your software all by yourself, consider safe and stable countries in Latin America, like Costa Rica.
I don't know if I would want to risk the Chinese government blocking some vital net service I need for my business. My own site for example is blocked in China.
The Great Firewall sucks but I use a VPN anyways. My connection is still very fast (for instance, I reached over 1000 kb/s on a torrent yesterday). That being said, although I don't morally agree with the firewall, it has contributed to the success of many popular Chinese websites (notably Facebook/Twitter clones).
I moved to China a few weeks ago and was amazed how this place is an ideal place for startups/freelancers. First, the cost of living is extremely low AND you get a similar (if not better) quality of life than what you can get in the US. I live in Shenzhen, a very young city with a booming economy and the world's capital of electronics manufacturing. The population density here is much higher than even the largest US cities, which means: a lot of 24/7 restaurants, night clubs full everyday of the week / hour of the night, convenience stores around every corner, cheap taxis (3$US can get you far), etc. There are very few foreigners but it can be a nice thing at the same time because when you see a fellow westerner, you are tempted to socialize very quickly and most of them have interesting stories to tell. Ah, I was about to forget: Chinese girls love westerners.
China is also ideal for startups. The economy here is growing very fast and the domestic market is huge. The software industry here seems to be lagging behind the US by a couple years. This means that people knowledgeable about the western market have a significant edge because they are able to foresee the trends that are likely to take place in China. That's why there are so many Chinese clones of popular western websites.
I could go on and on... Get in touch with me if you'd like to ask some questions.
EDIT: Some pictures from my apartment http://www.flickr.com/photos/50425387@N06/