I came across this news story today about Chinese action movie star Jet Li, who is upset about his Hollywood-made movies being unavailable in China due to Chinese censors. The Chinese government still exerts very strict censorship on entertainment content (movies, music, books) made available in China. China also has market access restrictions on foreign movies (only 20 are allowed in Chinese theaters each year) and has recently instituted a pre-approval requirement for music offered online by foreign companies.
Of course, none of this means you can't find most of the banned movies, CDs, etc. in China - its just that you can't find legal versions. These regulations have the indirect effect of giving pirates a huge advantage over companies that want to sell their products legally in China. For example, a website illegally offering music downloads isn't going to bother with getting approval just as the vendoes of pirated CDs and DVDs all over China aren't concerned with which titles have been censored by the Chinese government (some of them are probably their best sellers). The article states that censors cut scenes from "Pirates of the Caribbean: At World's End," claiming the portrayal of Chow Yun-fat as a "bald, scarred pirate" insulted Chinese people. However, I'm sure many Chinese people purchased pirate DVD copies of the film which were probably available even before the film's official release.
China certainly has the right to implement its own laws and regulations, even if they differ from Western legal norms. However, these censorship and market-access restrictions operate as a huge barrier to companies wanting to do business in China legitimately while giving pirating operations a big advantage and making pirate copies the only purchase option for Chinese consumers. Maybe if enough well-known Chinese actors such as Jet Li as well as popular musicians, etc. voice their concern, some type of compromise can be figured out.