Google Translate added the traditional Chinese (spoken in Taiwan, Hong Kong, Macau) and also an option to suggest a better translation if you see phrases that look weird (like in the screenshot below). You can make suggestions only for Arabic, Chinese and Russian, the languages for which Google uses machine translation.
Google Books has just been launched in Chinese, with a very limited amount of books (a search for "China" returns 2325 results).
"China Network Communications Corporation (CNC), the country's second largest fixed-line operator, will use search engine giant Google to provide Internet search services for its 16 million broadband users," reports People Daily Online.
Google made a lot of sacrifices to try to become an important presence in China, where Baidu dominates in search and advertising. Google launched last year Google.cn, that delivers censored results to comply with local regulations and to offer a more reliable service to its users: "Google users in China today struggle with a service that, to be blunt, isn't very good. Google.com appears to be down around 10% of the time. Even when users can reach it, the website is slow, and sometimes produces results that when clicked on, stall out the user's browser. (...) Filtering our search results clearly compromises our mission. Failing to offer Google search at all to a fifth of the world's population, however, does so far more severely."
Philipp Lenssen quotes some interesting counter-arguments, like this one from Danny Sullivan: "Ultimately, I want Google to pull out and fight back. I can see the argument for being engaged in a country, for trying to help promote change over time. But I feel like Google should be big enough and principled enough to be engaged by not being engaged. That might do far more good now than years down the line."
But maybe Google is not powerful enough to make a difference in China's internal regulations or maybe they try to build something solid there, so they can have more authority. It will be interesting to watch the months to come, when Google will try to add more services to Google China, to build custom ones only for the Chinese audience, and hopefully even to be brave.