It does not matter if it's China, Hawaii or Timbuktu, it's wrong in any case. I can understand somehow western people sinophobia as they will be displaced as "owners of the world" in the next 50-100 years but if I were a "western" citizen now and were given a forced choice between China or my government having my digital data I would choose China every single time. Same reason for a Chinese citizen to choose Germany and not China for example.