Moving the data to China is pretty much the same thing as backdooring the encryption, as we have seen.
Really though, decentralised is the way to go: Apple should allow custom endpoints for iCloud that users can set. If the UK or China wants to block a regional endpoint, they can.
Having user provided configurable iCloud servers might be a bit too empowering for Apple though, I suspect they would rather profit from their hosting services!
But who knows, maybe they will be forced into empowering users?