Apple thinks they should sell in China. China won’t go for it.
Apple is selling in China. China insisted that Apple customers in China data had to be stored on servers inside China's borders on Servers provided by Chinese carriers. Apple had to agree. However, China had to agree that the data was permitted to be encrypted by Apple's customers using their own passcodes before being loaded onto those servers. China's government agreed. China's news system made a stink in January about this, so Apple agreed that China could "security check" that the servers were "secure" and that the connections from the Apple devices were also secure.