Google pulled out of China in 2010 after criticism from civil rights groups and the United States government for censoring results leaving the market to Baidu.
"Google risks abetting Chinese government abuses with a censored version of a search engine in China", Maya Wang, China researcher at NGO Human Rights Watch (HRW), told HKFP.
However, the Chinese human rights community said Google acquiescing to China's censorship would be a "dark day for internet freedom".
The initiative would represent the first time in nearly a decade that Google has operated its search engine in the country, whose Great Firewall now blocks its service.
Search terms regarding democracy, human rights and peaceful protests will be among those blacklisted in the new search engine app, the report said.
It's good that Google's famous "Don't be evil" motto isn't an official motto anymore, because Google is about to do a bunch of evil in the near future if a whistleblower is to be believed.
The worker, who declined to be named, said that he had seen slides on the effort and that many executives at the vice president level were aware of it.
Google has been heavily restricted in China since 2010.
Google's main search platform is blocked in China along with its video platform YouTube, but it has been attempting to make new inroads into China. It's an Android app, and allegedly a finalized version has been shown to Chinese government officials. "For the world's biggest search engine to adopt such extreme measures would be a gross attack on freedom of information and internet freedom".
The company made a decision to quicken the development of a censored search service after Mr Pichai met with top government official Wang Huning in December 2017, the Intercept reported. The app Google is building for China will comply with the country's strict censorship laws, restricting access to content that Xi Jinping's Communist Party regime deems unfavorable.
Human rights group Amnesty International is anxious that such a move from Google would set a unsafe precedent for the country.
Amnesty International slammed the censorship, The New York Times reported.
"We also made clear that these attacks and the surveillance they uncovered-combined with attempts over the a year ago to further limit free speech on the web in China including the persistent blocking of websites such as Facebook, Twitter, YouTube, Google Docs and Blogger-had led us to conclude that we could no longer continue censoring our results on Google.cn", the company wrote in a public statement at the time.
Google declined to comment on the accounts and the CAC did not immediately respond to requests for comment from Reuters on Thursday.
U.S. internet titans have long struggled with doing business in China, home of a "Great Firewall" that blocks content as seen fit by officials.