This sounds reasonable but I feel just like OP, its still missing the forest from the trees

Its not about who has the data, although that is important. Its not about subversion of a population by a foreign state, although that is important too.

The crux of the issue is reciprocity.

China does not let any CAN or US companies into China markets, without first demanding local factories, forcing local production, requiring equity control and even IP. And if you dont share it, bohoo they will steal it anyway. And, there's no recourse.

The chinese govt has abused free trade for so long. Its time to demand fairness.

They dont give us access into their markets? OK! We close our markets to their corporations.

Its as simple as that. The golden rule.