Smart move by Microsoft – make the price of their software low enough so that the extra cost over a pirated copy is worth the positive feeling by buying a legal copy. It’s still really expensive compared to the average income, but they have to draw a line in the sand at some point.
The problem is that the basic version of Vista is just that – basic. Getting a pirate version of Vista Ultimate is still the way to go. (If you are in China)
Microsoft is apparently also selling Windows+office to China based students for next to nothing, which means that they are willing to go the Microsoft route rather than free nix alternatives. That’s an even smarter move, that should pay dividends in the years to come.