Microsoft has joined with China Telecom, with 210 million phone subscribers and 80 million internet clients, to provide Windows Live Search powered services.  A new search engine, called "114" has appeared on China Telecom's partner website http://www.vnet.cn

"The service is still in trial period and formal service will be started in early October, a source at China Telecom told Xinhua Thursday.
The website now provides for web-page and yellow-page search services, as well as BBS and Blog search services.
Search services for local information, pictures and video images will be unveiled in two months, the source said."

news source: CRIEnglish.com

Microsoft trails far behind in China's lucrative search market, expected to double in the next 5 years:

"Baidu, based in Beijing, had a 50.3 percent share of the Chinese Internet search market in the second quarter of this year, up from 43.9 percent in the first, according to the researcher Analysys International. Google, owner of the world's most-used search site, had a 16.2 percent share, up from 13.2 percent and Yahoo had 15.7 percent, down from 21.3 percent, Analysys said.
Microsoft was included in the "others" category, which had a combined 3.7 percent share, according to Analysys."
news source: ChinaDaily

Microsoft seems to be quite willing to buy it's way into the game:

"Before entering into the agreement with Microsoft, China Telecom terminated its cooperation with Yahoo! in search services in August.
China Telecom has also instructed its provincial branches and portals to adopt Microsoft technologies and terminate cooperation with other search engines.
Earlier media reports said the cooperation would last till 2008,and that China Telecom would share revenues of the search engine service with Microsoft on a 70-30 split in 2007 and 50-50 in 2008.
In addition, Microsoft will pay 21 million U.S. dollars to China Telecom as a base income.
Both parties declined to confirm the report."

news source: CRIEnglish.com