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Xinhua had reported Google was “very late” in submitting the application.

Phone calls to the regulator, the Ministry of Industry and Information Technology, before Friday’s news were not answered.

For China, the renewal takes the heat out of a high profile dispute at a time when American and European businesses are changing their once bullish attitudes about the China market and complaining about unfair regulations and other obstacles.

“Basically, this was a smart move on the part of the Chinese government to kind of defuse the situation so that the Google search engine will still be available in China,” said Paul Denlinger, an Internet consultant for startups. He said that the friction between Google and China won’t disappear but will temporarily dissipate.

Among the things to look out for in coming months is whether Google services will continue to be featured on new mobile phones in China, Denlinger said. Motorola had in recent months been replacing Google functions with those of its Chinese rival Baidu, he said.

“It will be interesting to see if Google can stop the slow bleeding,” Denlinger said.

Google opened its China site in 2006 to attract more Chinese users after the government filters slowed their access to its main U.S. site,

China has routinely blocked parts of Google’s service such as YouTube.

Even without the license renewal, Web surfers could still reach Google’s Chinese-language Hong Kong site by typing in its “.hk” address directly. Industry analysts, though, believed many people would have defected to Chinese competitors such as Baidu.