The Chinese are trying to explain exactly what they want in clear language:
http://www.chinadaily.com.cn/business/2013-07/03/content_16716093.htm
"With the rapid development of mobile data services and the increasing scarcity of radio spectrum resources, TDD technology is destined to become the development trend of mobile communication. However, compared to LTE FDD, the TD-LTE at current stage lags far behind in terms of both commercial development and global influence."
They want TD-LTE to become an equal competitor to FDD-LTE so that their companies such as Huawei can go forth and do business in emerging markets as the world transitions to LTE and then LTE Advanced over the next few decades. It appears to me the Chinese copied the US tactic of having a major telecom, China Mobile for them, Verizon for the US, use a standard almost no one else does, and then leverage backwards compatibility with that standard, TD-SCDMA for China Mobile and CDMA for Verizon, to promote local companies, Huawei and others for China, Qualcomm for the US.
In theory the Qualcomm baseband chipsets iPhones have have support for TD-SCDMA and TD-LTE. But I doubt the Chinese would wish to have a de facto Qualcomm monopoly occur for LTE baseband chips.
I assert Apple won't be allowed officially on China Mobile until they put a Chinese LTE baseband chipset into a version of the iPhone. Thus the deadlock.
There is one more card for China to play. They are apparently experimenting with relaxing currency controls on certain foreign companies:
http://www.cnbc.com/id/100556006
Observe which foreign companies are on the list so far: "They are Shell, Samsung, Intel Inc, Alcatel-Lucent , Schneider Electric and Caterpillar Inc ."
Observe that Apple is not on the list. Until China says otherwise, the money Apple makes in China stays in China.
