Google on Thursday denied it was planning to shut down its business in China by the end of the month, dispelling rumors that it had informed its Chinese advertising agents to cease their business operations in the country.

Google's spokeswoman Marsha Wang told China Daily on Thursday that the company had not ordered its domestic advertising agents to stop doing business.

"That's not possible. Our China operations are still at normal," Wang said.

Google's China team continued to develop new services, hire people and its businesses were "as usual", Wang said.

In fact, two of Google's domestic advertising agencies also confirmed on Thursday that their business was "running well".

Rumors about Google's possible retreat from China were running high on Thursday ever since its CEO Eric Schmidt said at a media summit in Abu Dhabi a day earlier that he expected "something will happen soon" about its high-profile spat with China.

Schmidt had said on Wednesday that Google's dispute with China would be solved "soon" and that the search giant was still in active negotiations with Chinese officials.

China's Ministry of Industry and Information Technology refused to comment on the Google issue on Thursday.

But Qin Gang, the Foreign Ministry spokesman said at a regular press briefing that "the communication channel between relevant Chinese ministries and foreign Internet operators is running well."

Qin also reiterated that foreign Internet operators should respect Chinese law while doing business in the country.

Google sent shockwaves across the business and political world when it declared on Jan 12 that it would stop censoring Chinese search results, and said it was considering pulling out of the country.

The announcement quickly turned into a political spat between Beijing and the US administration, which is weighing the merits of taking the dispute to the World Trade Organization.

Most industry experts believe that Google's likely exit from China may be a lose-lose deal for the search leader and China.

Top Chinese officials have, during the past few days, also sounded ambiguous over whether Google was still in talks to resolve the issue or not, signaling the difficulties for the two parties to achieve any sort of meaningful agreement.

Chinese officials attending the Two Sessions over the last few days have repeatedly urged Google to respect related laws of China.

But a senior Google official said on Wednesday that the company had not changed its decision to stop censoring its Chinese language search site and that it was prepared to shutter the website if necessary. Tao Wenzhao, an expert on US studies at the Chinese Academy of Social Sciences, said it would be a lose-lose deal if Google retreated from China.

A series of conflicts between the two powers, ranging from the US move to sell arms to Taiwan and US President Barack Obama's meeting with the Dalai Lama, have put the ties on ice.

Tensions, however, now appear to be easing after Washington sent two high-level officials earlier this month to mend relations.

Tao said even if Google finally decided to exit from China, the incident would have little impact on the soured relations between Beijing and Washington.

"It is worth remembering that Google is not the American government. This is just a commercial case," Tao said.