Despite being able to buy unlocked iPhones in many cities at third party importers, it seems that there will be no official iPhone for China at this time. This could be the product of putting a partially government owned telecom in the same room with a reportedly stubborn electronics dealer and expecting them to hammer out an agreement.
The net result is no formal agreement, but those that want iPhones can still buy illegally unlocked ones without any trouble. Apple is losing out on at least some form of revenue sharing to an audience of consumers that is larger than the entire U.S. Population.
“China Mobile remained cool in its response about the split, with a spokeswoman merely stating, "Our parent has terminated talks with Apple over the iPhone."
The door remains open for more talks, with China Mobile telling the press that it is willing to participate in possible future talks. The country's smaller provider, China Unicom, has also expressed interest in talks with Apple.”
It's probably a safe bet that Apple will be back at some point.