Ah. Seems dumb of them. There are millions of Chinese people all around the world that will be trying to email their family back home. Why block just one email provider? Why try to segregate yourself from the world's email network? It isn't even going to work because what every Chinese person will do is get a tunnel to sign up for the non-Chinese email service (maybe even Gmail!) and it will just further push people to use encryption.
If the Chinese government were shrewd, they would do what the American government does: make using American servers as easy as possible then spy on the contents.