Xinhua, China's official news agency, and China Mobile, China's largest mobile telecoms operator, are setting up a mobile search company together, the two state groups said yesterday.
The move comes amid upheaval in the Chinese online search market as other players attempt to grab market share following Google's partial exit from the market this year in a dispute with the government over censorship.
However, the joint venture's political significance is expected to far outweigh its commercial impact. Xinhua was unavailable for comment but the news agency described the deal as a propaganda manoeuvre.
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