Microsoft is having ongoing discussion with the Chinese government over the console being in China as they are somewhat weary. The only console currently in the Chinese market is the PS2 due to the overwhelming popular PC gaming. China currently has 120 million out of 1.3 billion people connected to the internet and it is constantly growing, as we know Xbox Live is a key factor the experience and needs ISP support from China if the Xbox 360 is brought there.

-dpcough-