Google hopes to retain a substantial business presence in China even if its standoff with Beijing over censorship forces it to close its flagship local search engine, local employees and industry experts say.

Speculation intensified on the 19 March that the US internet group was preparing to announce as early as Monday the closure of google.cn, making good on its threat to retreat from China unless the government allowed it uncensored search results.

The company runs google.cn, its China-registered website, in a joint venture with a domestic partner, as Chinese law bars -foreigners from holding controlling stakes in the internet content business. But most of Google's workforce in the country is employed by a separate company wholly owned by the US parent.

"Research and development staff all work with us," said an employee at Google Information Technology (China), a foreign-owned company, according to the Beijing administration for industry and commerce. Another employee who works in sales said most of Google's salesforce in China was employed by the same company and not by the joint venture.

"They have their R&D perfectly firewalled off, so they can continue to keep those people at work even if google.cn closes down," said Duncan Clark, chairman of BDA, a Beijing-based consultancy. However, Google executives fear that Chinese retaliation could make it hard for the company to keep any business there, including the R&D and advertising sales operations set up well before it launched google.cn.

A state-owned Chinese newspaper, quoting an unnamed Google employee, reported on the 19 March that the company could announce the closure of google.cn on Monday.

A person familiar with the situation said last week that Google had drawn up plans for the closure of the Chinese search engine and hoped to manage an orderly exit from the country.

"Google is likely to move features it now offers on the local search engine on to google.com and continue developing its offering for the Chinese market," said Cao Junbo, of iResearch in Beijing.

He said that if Google managed to close the local search engine and avoid frequent blocking of google.com in China, the company had a chance of holding on to some of its 35 per cent share in the Chinese search advertising market.

Google did not respond to a request for comment.