Has China Crossed a Line?

I'm wondering if China has crossed a line with its Google hack. It's relatively easy for the Obama administration to pretend that nothing's amiss when it's playing politics with the Chinese government. But when an American company that was just named "word of the decade" proclaims to the world that it is being exploited by Chinese intruders, can the President turn a blind eye to that? This could be the first publicity-driven incident (i.e., something that comes from public sources) that the new Cyber Czar will have to address, if not higher officials.

Oh, and expect China to issue a statement saying that it strongly denies official involvement, and that it prosecutes "hackers" to the fullest extent of its laws. That's nice.