There is plenty of historical precedent for this: spammers' IP ranges would be blackholed to send a message to their ISPs that such behavior wasn't tolerated. That the Chinese authorities decide to play this game at the nation state level should not give them a free pass, but should result in a nation state level response.
https://en.wikipedia.org/wiki/Censorship
The criminal co-opting of networks and nodes on those networks is not speech by any definition.
I'm either misunderstanding what you're saying, or it doesn't make sense. If a bunch of people take signs (with legitimate messages, free speech) and hang them off a bridge over the highway (causing accidents), then those people go jail. The fact that their message is free speech is irrelevant. The source of the message is being punished/jailed, not the message.
Am I mis-representing your statement?
To put it another way: if someone steals my car and uses it to rob a bank, even if that car is now evidence in a criminal investigation, it's still my car. The police have every right to confiscate it from the thief—it's not their car—but that doesn't mean that it suddenly belongs to them; it belongs to me. In both this case and the above case, I have a right to not be unduly punished for the actions of an unrelated third party (by having my website taken down; or by having my car permanently confiscated, respectively.)
The context here is very similar to a story that was on HN just yesterday (https://news.ycombinator.com/item?id=21671579). Banning a site from the internet for happening to be MITMed by China is very similar in its ethical implications to banning a site from the Internet for happening to have a domain-name that fits a pattern used by a botnet.
At this point we really need to start doing the "You wanted a Great Firewall? Enjoy. You now have no connection."
Removing China from the internet would also likely cause things that phone home to China to break. That would actually create some consumer awareness to boot.
Not my problem. Figure out a better way than getting in bed with fascist countries and then complaining when the inevitable door swings shut due to rightful backlash.