After meeting with President Obama at the White House today, Microsoft CEO Steve Ballmer appeared on CNBC. When asked about China, Ballmer asserted that they will continue to offer Bing according to Chinese law.
However, Ballmer did talk about issues that need to be addressed in China - such as the enforcement of intellectual property laws. It seemed pretty obvious that he does want to see progress in China. He just doesn't feel boycotting the country is the way to accomplish it.
Ballmer also responded to reports that Internet Explorer was also exploited by the hackers that attacked GMail. He said that Microsoft would work to fix any vulnerabilities his investigators uncover.