I on the other hand think that splitting countries into allies and enemies is stupid. China is a huge country, and excluding a billion people from your company just because their government does questionable things sounds like a pretty bad idea.

If you are really concerned about the confidentiality of your data, don't store it unencrypted in some SaaS where every customer service rep has full access to all your data. At that point you're already so vulnerable that exluding potenential employees from a whole country is just pointless security theater that some suit with an MBA thought up to justify his position.