Google cannot escape the US government agencies (CLOUD act) etc.

It doesn't matter what the promise.

They could sell their software stack to an independent European partner over whom they don't have any control and who doesn't transmit data back to the US.

If that was true, how does Google work within China?

By sharing data until public relations make change necessary https://www.theverge.com/2021/9/11/22668734/google-user-data...

If China can mandate Google to do something like that and having Google submit to it, effectively escaping US jurisdiction for this part of the world, why wouldn't it work in the EU applied to a completely different set of goals?

US jurisdiction doesn't even protect its own citizens against their government requesting data from google about them, why would it protect those of Hong Kong from their ... oh wait i get it

IIRC foreign companies must form a joint venture with a Chinese one that would "own" the data and processing.

It mostly doesn't?

> Can it? Is this within the range what Google is allowed to do in the EU right now?

Google's current GDPR consent screen is not compliant. It provides an easy "accept" option but no easy decline option, which is against the regulation.

Given they are already breaking the law and successfully getting away with it (otherwise they'd stop), why would they not break it here?

In fact, it doesn't even have to be malicious; the data can accidentally be fed into a dataset that's used for ad targeting - maybe it was set up that way a decade ago, nobody knows about it and it isn't entirely obvious considering the entire targeting machine is a black box with thousands of parameters so it's impossible to definitely prove what data was used to target a particular ad.