Don't assume that the Chinese Gov. are ignorant of PR dangers, they aren't irrational. It would be complex mixed feelings.
They aren't ignorant of PR and they know when to apply force and when to hold back.
"Chinese internet analysts said they were shocked by the Google announcement, but at the same time they understood the reasons behind its threat to back out of China. They said the cyber attacks have exposed Google's inability to protect its users' privacy..."
This can always backfire on them ... once groups like those at 4chan get working on Baidu :) And I'd be willing to bet that Google has a much more reliable security. Not to mention that this statement is kind of hypocritical ... since when are they concerned about privacy?
Also ... these PR spins won't work for them internationally ... since communism has a negative image, and this is one of the factors considered when extending a business to China.
So they have a more relaxed communism, allowing privately owned companies to thrive ... but look, Google announced they were hurt by the Chinese government, and apparently they weren't the only ones. Whom would you be more inclined to believe?
And Google is also good at PR :)