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When it comes to China, it's not entirely fair to single out Apple here given that non-Chinese companies are not allowed to run their own compute in China directly.

It always has to be operated by a sponsor in the state who hold encryption keys and do actual deployments etc etc.

The same applies to Azure/AWS/Google Cloud's China regions and any other compute services you might think of.

It's entirely fair. Apple had the choice to stop pursuing business in China if they felt it conflicted with values they prioritized. Evidently it doesn't, which should tell you a lot about how accepting Apple is of this behavior worldwide.
iCloud E2E encryption (advanced data protection) works in China.

There are other less nefarious reasons for in-country storage laws like this. One is to stop other countries from subpoeanaing it.

But it's also so China gets the technical skills from helping you run it.

You don’t have to use iCloud. Customers in China can still make encrypted backups on their computers. I also believe, but please correct me if I’m wrong, that you can still do encrypted backups in China if you want.

All the pearl clutching about Apple doing business in China is ridiculous. Who would be better off if Apple withdrew from China? Sure, talldayo would sleep better knowing that Apple had passed their purity test, I guess that’s worth a lot right? God knows consumers in China would be much better off without the option to use iPhones or any other Apple devices. Their privacy and security are better protected by domestic phones I’m sure.

Seriously, what exactly is the problem?