While I do agree 100% with what you said about google and its chinese service, I must point out something that's a bit wrong about "yahoo released that poor guy's data to the chinese and got him jailed"

Here's part of what I posted as a followup to a related post in another blog - http://joi.ito.com/archives/2006/02/10/subpoena_disclosures_to_protect_p...

it must be remembered that not all yahoo.com.* domains are actually yahoo - quite often they are cobrands with one local portal or the other, with different corporate and other hierarchies. Yahoo China is actually managed and operated by local b2b portal Alibaba.com.

So, what happened was that police in Beijing subpoena'd data for a chinese citizen, from a corporation headquartered in Beijing, China.
Extra territorial enforcement would have been far tougher, and typically managed through MLATs - mutual legal assistance treaties - between law enforcement bodies in different countries. The OECD has done some research on this - http://www.oecd.org/dataoecd/18/43/34886680.pdf

Here's Jerry Yang on why yahoo decided to partner with a local Chinese outfit and release management and operational control to them - http://www.businessweek.com/technology/content/aug2005/tc20050812_2399.h...

Hong Kong companies and residence do enjoy a certain greater degree of autonomy and freedom of speech than in the mainland, but if push comes to shove, it'd be great to remember something called article 23 of Hong Kong's "basic law" ..
http://en.wikipedia.org/wiki/Hong_Kong_Basic_Law_Article_23
http://jurist.law.pitt.edu/world/hongkong.htm