I think you're right in that it really does depend on when China becomes a free society. Personally, from what/who I know from China, I don't see this happening within the next decade. I expect political instability within China to reach a tipping point, after which we'll either see a very slow global liberalization or a definitive move towards a more totalitarian Chinese government with a modern twist.

Honestly I don't know why Google has any faith in the good will of the future Chinese government. As has been established for a very long time, China needs foreign expertise more than any foreign company needs a labor or consumer market within China.

If so, they don't need to interact with the government that much like when they offered a search service to Chinese netizens.

I can think some companies that just do this. Hulu has an office in Beijing, although it doesn't offer video streaming service in China. And Grab has an office in Beijing too, although it only targets Southeast Asia market.