Pretty much.
Spun alternatively... "China has better privacy protection laws than the US does, because they don't allow data on their citizens to be stored on foreign servers."
Every time you see one of those sensationalized stories about Chinese apps (like Meitu) asking for your IMEI number of your phone and other seemingly irrelevant details, it's because the Chinese devs don't have access to any info stored in your Apple iStore or Google Play account info to uniquely identify you for marketing purposes, because they're not allowed to store stuff there by law. The US devs and authorities already have access to all that personal / demographic info. If your phone supports it, you can simply block those irrelevant permissions from being shared with the Chinese app devs and go on your merry way.
Having all the user data in-country also means that they can serve subpoenas to access data to solve crimes. Sure, that could be abused by a corrupt regime, but transparency works both ways, and good transparency is the best tool to fight corruption.
Also good for economic protectionism and industrial espionage... when I worked for Disney, we essentially had to clone our entire data center to build out the online ticket store for SHDL to comply with these laws. This infrastructure investment keeps the economy in-house, as well as spreads the expertise for e-commerce to Chinese techs.
The Chinese government is run by people with science and engineering degrees, and it shows... they know what they are doing, for better or for worse. Just need to solve that corruption issue, but we're hardly the champions at that at the moment.