Yahoo scolded for helping China imprison dissident - MSN Money Yahoo! was taken to task in a congressional hearing for handing over information to the Chinese government that lead to the imprisonment of a dissident reporter. There is certainly much that could be said about standing up to oppressive governments and the risks of locating infrastructure in such countries.
I think one of the most important lessons to take away is to take more personal responsibility for your own security and privacy. Information collected by the services we all use is archived almost indefinitely. Today the problem may be China, but who knows which government may turn oppressive over the next 10 years. Even the US government has a history of witch hunts.
Internet users must be proactive about their security. Tools exist to enable people in China to use the Internet freely without any censorship or monitoring. Anonymizer provides such a service free to Chinese users. A number of other organizations do the same. Encryption, anonymity, and privacy tools can largely de-claw the modern police state, but only if they are used consistently.