Sina (SINA) and Google (GOOG) have announced a deal that puts Google search box on Sina’s website, which means Sina will be sending traffic to Google, in exchange for a share the search advertising revenues with Sina. Google is also going to be offering Adsense/Adwords on Sina’s website. Sina is the third most popular site in China in terms of traffic. These moves are an effort by Google to compete with Baidu (BIDU), which is still a big player in the Chinese Internet market, and a thorn in Google’s side.

“Both Google and Baidu are competing to sign up smaller websites for their traffic,” writes George Chu, China Internet Analyst for UBS Research. He points out that Baidu will now have to give out more in “revenue sharing percentage” and advertisers might be “less willing to pay a higher keyword price at Baidu now that Google is a more creditable competitor.”

Looks like Google is finally getting somewhere in China. Google has been expanding its presence and investing in local tech start-ups, as part of its long term China strategy.