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If these rumours are true, FB will be deploying a new product for China. Is it too cynical to remark that one of the motivations may be that the Chinese government's ideas about privacy may be incompatible with the safeguards against government snooping that Facebook has already put in place in the wake of the recent populist uprisings?
I would be surprised if the Chinese government _didn't_ stipulate that the social network would have back doors for "official business".
Yet like Google, Baidu has been unable to execute a successful social network or microblog to-date. Hello Facebook, welcome to China.

Considering this from the article: "Facebook is really on the eve of entering China, the contract has been signed, with some Chinese partner who will build the new site according to some model, but which will not completely connect to Facebook.com."

I'd say, it's still not clear that Baidu/Facebook will be able to execute a workable social network (above board means monitored by government).

it's still not clear that Baidu/Facebook will be able to execute a workable social network

Pooling the effort of losers in a market is like having the second and third place finishers in the hundred meter dash tie their legs together to run three-legged and then challenging the winner to a rematch. (I think I first read that comparison on Daring Fireball).

Facebook has never attempted to enter that market yet; I don't think that's quite the same as being a loser in the market.
Rumours only. I'll believe it when I see it.