As Paul reported yesterday, Chinese officials raided Microsoft offices in Beijing, Chengdu, Guangzhou, and Shanghai in recent days. Very little was revealed as to true the intentions of the raids, except that it seemed little more than bullying tactics by a Chinese government bent on showing strength and attempting to cast Microsoft in a bad light among its citizens.
Reports from Sina News (thanks Bing translator) state that the intent of the raids were to catch Microsoft in unfair trade operations. We'll have to wait and see what comes of the investigations, but it's clear that the Chinese government is working to cull Microsoft's attempt to do business in the country. I'm sure there's hope that if Microsoft can be cast in an untrustworthy light, the Chinese people might choose to use Chinese government created and sanctioned software that it is reportedly developing. It's also possible that Chinese officials could somehow believe that the tactics are part of a strange negotiating dance where Microsoft would cry "uncle" and give in to continuing to support Windows XP or make modern OS source code available for the country to consume and duplicate like it's so good at doing for everything else invented in the West. But, more clearly, China is publicly concerned that software from the West could come with ready-made, integrated backdoors, giving the NSA espionage access.
As part of the raid, Chinese officials interviewed Microsoft employees and took copies of contracts and financial reports, saying the company did not fully disclose information about its Windows and Microsoft Office.
Not much more is being reported as Microsoft is following Chinese legal procedure and keeping mum on the situation until it is able. It's also reported that the investigation was initiated by complaints from rival companies.