I agree, but with a rising middle-class, there's too much potential business for Apple to simply cut that market out. Or, for Apple to pull out of China and attempt large-scale manufacturing of products with a similar cost/efficiency rating in other countries such as India, Malaysia, Vietnam, etc.
China is in a Catch 22 type of situation. On the one hand, the revenue earned by way of taxes both for wages and exports is quite lucrative to the government. But at the same time, China is very concerned with Apple's privacy policies enacted on the iPhone 6/+ and iOS8, and will do whatever it takes to "monitor" its citizens. Especially if it means hacking their own people's iCloud accounts.
It's a delicate balance that Apple and China must find.