They can. They just need to comply with China’s data and censorship laws.

It’s why Microsoft and Apple are available in China.

Technically, that's true, but it never really works that way. Google had complied with their laws, but got hacked. Foreign websites will get shut down randomly without warning or explanation. Sometimes they'll get restored, but even then the damage is already done. iTunes is still banned in China.

No, even technically, it is wrong.

Here is a Google example from when I lived in China: Google was at the time competing with Baidu over the search image market in China. My home internet was fast and with great quality. Only Google image search results had very often problems loading image previews. Its not that it "didn't work". It just failed "a little", maybe half the images in the results pag didn't load. So Google image search wasn't really blocked. It could have been total coincidence that it was like that for years and only for Google image search. The site that was coincidentally competing over the lead in the Chinese search market against a Chinese company. After some weeks, I started using Baidu image search, even though their result quality was worse. But at least it worked. I am sure many people in China did. That's "competition" in China.

Then it's not a level playing field, obviously.

ahh, sorry, I forgot the whole world must have the exact same laws as the US, otherwise it's "unfair"

Most US firms can do business in China. Like Tesla, who even gets preferential treatment that were envied by anyone who ever did business in China (foreigner or not).

They just relinquish certain strong hold to a sovereign nation, like they have to host their data center inside China (both politically important, and economically beneficial). And they also risk their data being stolen (or so they claim).

You missing an important point here, compliance with local laws. US companies CAN do business in China, only if they comply with Chinese laws. Whether these laws are just or unjust is beyond discussion of this thread, what matters is if you want to business in China, you have comply to it.

Imagine, if a Chinese company wants to operate in US but refuse to comply local regulations, what will happen to that company?

Fb, Google and others are banned from China because they refuse to cooperate. What about Tiktok?

Well you can’t assume a fair playing field between USA and any other country, let alone a developing one. They needed protectionist measures to be able to industrialize as well as they did.