Don't forget that Google's customers are not the users, it's the advertisers. So while there are lots of potential eyes for the ads, the ROI from advertising income might not be that high. I am not a bloodsucking toolmarketing exec, but I would imagine that the per-hit rate would be lower in China than the US or Western Europe. Given the large server and bandwidth costs for handling China's population, it might not be worth it when you stick the IP/PR risks on top.