This part wasn't a conscious decision, because the reference frame of time and orbital mechanics were discovered long after the practice of timekeeping. We may have a similar problem on a galactic scale some day.
* Friday UTC 2300 = local time 4pm PST - This is Friday
* Saturday UTC 0100 = local time 6pm PST - Is this Saturday?
* Saturday UTC 2300 = local time 4pm PST next day - This is still Saturday?
Most servers run on UTC under the hood, and a lot of big organizations have experience already in terms of doing all timekeeping calculations in UTC. It may seem weird, but works pretty well in the long run -- and not having to deal with corner cases like DST or geographical ambiguities around time is extremely valuable.
Have you ever thought about what it's like to live near the edge of a timezone? In a city where half the city uses one time and half uses the other?
China is fine, because the day doesn't change during daylight.
Yeah, computers should use UTC. It's easy for them to convert to/from local time for the user. This is what computers are good at.