The Financial Times is reporting this:

Google has drawn up detailed plans for the closure of its Chinese search engine and is now "99.9 per cent" certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to a person familiar with the company's thinking.

In a hardening of positions on both sides, the Chinese government also yesterday threw down a direct public challenge to the US search company, with a warning that it was not prepared to compromise on internet censorship to stop Google leaving.

Google will not confirm, but if this is true, it's about to get interesting.