I'm confused... did the US sue China when it banned American companies from competing inside their borders? No. Case over. US can do whatever it wants inside its borders, similarly to how every other country does. This lawsuit is ridiculous.
Yes they ban foreign companies. All companies need a Chinese partnership to enter China.
Eg. Azure needs to let someone else handle the infrastructure there. The only exclusion i know of ( i think) is Tesla, because China is very interested in it's tech and for it's goal of EV dominance.
They don’t, there is plenty of western companies there. And yes, they need a local branch, same way non-US companies need US branch to conduct business there.
American law forces all US-controlled companies to relay user data to various govern agencies without any real oversight. EU is protecting their citizens too.