China has a vested interest in spreading it's influence globally, the same way the United States has (and is receding from a bit under the current administration). It would be far more valuable to China to get a global company like Google propagating their censorship requirements than continuing to prop up their own state-run option. If Google caves, other countries might ask for the same demands as well, which supports the notion that China's way of doing things is the 'right' way. In short, having global companies doing China's bidding expands China's influence.

Reading a bit about the Belt and Road Initiative is probably a good primer on some of China's global interests right now.

I don’t understand why this is being downvoted.

Google is dominant nearly worldwide. If China is able to get Google to cave and build the censorship machine then what barrier is there to turning the feature ‘on’ for other countries that ask for it? There are plenty of oppressive regimes interested in a censored Google but they don’t have the pull to get Google to build it right now. Once it’s built though why wouldn’t Google’s response just be shrugs “sure why not?”

I think it is indeed a slippery slope and legitimizes China’s plan to influence the internet for the worse.

Further, once Google depends on its China operations for revenue, what's to stop the Chinese state from leaning on them further? With enough leverage, they won't scruple at affecting what Google does in the west as well.

Any company that adds a customer that becomes the source of ~20% of the company's revenue implicitly gives the customer power over the company, the bigger share of revenue the more power. Google would be insane to give this much power over itself to China, ignoring that developing this technology sets the precedent for oppressive regimes to demand flipping on the "more speech suppression" switch.

You are spot on, and there already is a track record of this with telecom.

Remember all of the handwringing about BBM messages being difficult to intercept? Then the crying suddenly went away, and a few months later you heard about police breaking up organizers of riots.

Why not let these companies in, let them operate for a few years, then migrate the ownership to a state owned company?