When he first encountered these problems shortly after founding Baidu 10 years ago in Beijing, Li considered moving the company to Hong Kong, but concluded doing so would make him an enemy of the state.

"I'm Chinese. I don't have any other choices," he said Monday at the Web 2.0 Summit in San Francisco, where he was interviewed on stage by conference co-chair John Battelle.

By contrast, a foreign company that doesn't obey Chinese rules can get in trouble with the government but still maintain a "strategic partner" status and be allowed to operate to a certain degree, he said.

Asked about Google's troubles in China, Li chalked them up mostly to a lack of understanding of the market's dynamics, which change fast as the Internet population grows and communications improve and get faster.

This year has been tumultuous for Google in China. It started with Google's decision to stop censoring results in its Chinese search engine after the company said that Chinese hackers had stolen Google intellectual property and broken into human rights supporters' Gmail accounts.