Microsoft chairman Bill Gates has raised Chinese eyebrows with news of an angry outburst against the country.

Legal action between Microsoft and Google continues to yield an insight into the temper and passions at the traditionally anodyne Microsoft. News today comes from a former employee who testified in a Washington court that Gates said the Chinese people and its government had "f*****" his company.

According to wire service reports, former Microsoft executive Kai-Fu Lee testified that Gates had lost his temper over a lack of success in penetrating the Chinese market.

Microsoft is suing Lee, a search technology linguistics and translation expert along with his new employer, rival technology corporation Google, over an alleged breach of contract where Lee agreed not to perform work for competing firms for the space of a year.

While overseas reports stated Microsoft is denying Gates made the comments, the local company was not able to confirm this, with a public relations representative saying only that they were unaware of the story and did not have access to wire services, later adding that: "Microsoft refuses to comment".

In the US, a press statement issued by Microsoft said: "We are asking the Court to require Dr Lee and Google to honor the confidentiality and non-competition agreements he signed when he began working for Microsoft."

In June this year, Microsoft CEO Steve Ballmer surprised many observers after he said software piracy rates in China were as high as 90 per cent, adding that this was a fate Microsoft had been forced to accept to gain entry into the Chinese market.

At the time Ballmer quipped he would prefer to see Microsoft's software pirated than that of competing products.

Chinese commercial sources in Australia, who asked not to be named, described Gate's alleged comments as "unhelpful and perhaps difficult", noting the Chinese software market required both a "mutual understanding" and a focus on "longer term" relations.

"Some Microsoft software, especially Excel is a good product, but to say these things can lead to confusion - I think there is some tension for Microsoft," the source said.