Using such an approach on the global channels like YT comments isn't an option (unless they choose to Balkanize them, and let only Chinese commenters talk to Chinese people).
Google isn't the only firm that does this; Twitter will selectively filter some tweets based on whether it's legal to show that content in countries that have outlawed fascist agitation (which makes for an interesting side-effect; doing a request for a tweet stream against a US proxy server and a German proxy server and delta-ing the results can give you a clear signal on "Twitter thinks this person is a Nazi propagandist." I'm wondering when someone will put an API in front of that and make it a service... "DoesTwitterThinkThatGuyIsANazi.com" anyone? ;) ).
So Balkanized rulesets might work for some countries but not others. China is well known for exercising their market size to make companies jump for them, the US is as well.
At the potential cost of a trade war of course.
That doesn't seem unreasonable. They could hide filtered comments from chinese users. This would allow the rest of the world to be unaffected by chinese regulation and "allowed" speech between chinese and foreigners.
I can see why they would want to do that and I could see why YT would go along with their demands to do so. I didn’t say I agreed with it.