How can we be comfortable with google or any company going to China and effectively saying yup, thats ok.

I don't think that's the parent point, it's more that if you do consider that doing business with the Chinese state is unethical then it makes more sense to push for regulation rather than expect big multinational companies to Do The Right Thing. Right now it seems that we're in a race to the bottom and the Chinese government is making the rules.

How does it make more sense? You can't influence foreign policy of your government and you won't find a party with such specific topics which is also powerful enough to actually accomplish something.

With a company like google you can create a shitstorm that will cost them. You can break a companies reputation with a hand full influencers those days.

PS. a company is not a robot (we'd even expect ethics from them). It consists of humans and we should expect acting ethical from a human. They don't get a license to kill the moment they enter their office.