Context #1: there has been a years-long trend for Western entertainment media (movies, games) to cater to the Chinese market. This ranges from voluntary censorship that seems odd in the West (no skeletons?) to more sensitive topics like sexuality.
Specifically, last year Blizzard disappointed fans by announcing a mobile Diablo game that no one really asked for and that many felt is squarely aimed at the Chinese market.
Context #2: the trade war and Hong Kong protests have brought a lot of attention to China in general. The Hong Kong protests seem to be particularly popular with younger people online.
Context #3: Blizzard's reaction seemed particularly swift and heavy-handed, giving the impression that it was more about not offending China than about discouraging political statements on streams. Blizzard's announcement on Chinese social media supported this impression, and their delayed and lukewarm non-apology statement in the US didn't do much to change that perception.
Further, Blizzard's support for LGBTQ suggests that it's not just about political statements on the stream, but the content of the statements is important. Put another way: would Blizzard's response be the same if the unauthorized statement was pro-LGBTQ rather than pro-HK? There is no way to know for sure, but if the answer is "no" that means Blizzard is indirectly picking sides.
Combine all that and Blizzard put themselves in an impossible situation with no good way forward.
My personal opinion: it probably was about China, it probably was a decision made locally further down the corporate ladder, and US HQ is now stuck with something they can't fix.