It had nothing to do with 'government-sponsored censorship', in fact, google showed different results to Chinese nationals on the other side of the line and the rest of the world for specific queries for a long time.
The hacks were an attempt at surveillance, most likely from the government.
"These attacks and the surveillance they have uncovered--combined with the attempts over the past year to further limit free speech on the web--have led us to conclude that we should review the feasibility of our business operations in China."
http://googleblog.blogspot.com/2010/01/new-approach-to-china...
http://news.bbc.co.uk/2/hi/8455712.stm
It had nothing to do with 'government-sponsored censorship', in fact, google showed different results to Chinese nationals on the other side of the line and the rest of the world for specific queries for a long time.