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?