However, China insisted that Google must obey its laws, after the company said it would no longer bow to the communist country's army of Internet censors by filtering search results available on google.cn.

The US firm -- whose unofficial motto is "Don't Be Evil" -- said it could abandon its Chinese search engine, and perhaps shut its offices in the world's largest online market by users, over theft of its intellectual property.

"No matter what decision Google makes, it will not affect overall trade and economic relations between China and the United States," commerce ministry spokesman Yao Jian told reporters.

"The two countries have multiple communication channels. We are confident in the healthy development of economic and trade relations between China and the United States."

In Beijing's first official reaction Thursday, a foreign ministry spokeswoman insisted China's Internet was "open" but defended its censorship system and said foreign firms must abide by the law.

Yao echoed those remarks, saying foreign firms operating in China should "respect the laws, public interest, culture and traditions in host countries, and take on social responsibilities accordingly."

"China is transferring from a traditional planned economy to a socialist market economy. Stability and development are our top priorities at the current stage," the commerce ministry spokesman said.

He said Google should "make the right choice" about its future, noting that China's development would benefit both the country itself and offer companies doing business there a "good market prospect."

Google said the cyberattacks were likely aimed at gaining access to the Gmail accounts of Chinese human rights activists, but has said it does not believe that goal was achieved.

The row has threatened to rattle ties between Washington and Beijing -- already frayed over a number of issues, from the Copenhagen climate change debacle to the value of the Chinese yuan and a number of other trade disputes.

Earlier this week, US Secretary of State Hillary Clinton demanded answers from China over the Google case. On Thursday, State Department spokesman Philip Crowley said Chinese embassy and US officials had met in Washington.

Crowley said the issue "raises questions about both Internet freedom and the security of the Internet in China" -- home to more than 380 million web users according to latest Chinese government figures.

Google said more than 20 other unidentified firms were targeted in the "highly sophisticated" attacks, believed to have originated in China, while other reports have put the number of companies attacked at more than 30.

Officials in Washington have been reluctant to comment on how the Google case could affect ties, but one official warned of future diplomatic fallout.

"If this was part of a deliberate strategy on behalf of China, it has implications," said the official, who asked not to be named.

US lawmakers on Thursday hailed Google's move and touted a draft bill that would prohibit US firms from storing users' personal information in countries that restrict the peaceful expression of political and religious views online.

Under the proposed Global Online Freedom Act, companies would also have to report to the State Department which search terms countries were trying to filter out.

"Google sent a thrill of encouragement through the hearts of millions of Chinese," Republican Representative Chris Smith, the bill's chief sponsor, told a news conference. "It is a game-changer."

"But IT companies are not powerful enough to stand up to a repressive government like China," said Smith.

"Without US government support, they are inevitably forced to be ever more complicit in the repressive governments' censorship and surveillance."

Experts said the issue highlighted deep differences between China and the United States -- despite mutual claims of a solid relationship -- but added it was too early to tell whether the Google case would directly impact ties.

"The problems that Google is running into are part of a general squall line in the larger storm of how China deals with the US," said Russell Leigh Moses, a Beijing-based political analyst.

Web security firm McAfee said the attacks on Google and other companies showed a level of sophistication beyond that of cyber criminals and more typical of a nation-state.

Microsoft chief executive Steve Ballmer said the US software giant took cyberattacks "seriously" but had no plans to pull out of China and would abide by local law.

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