When I look at the list of regions that Azure has for delivering MS SAAS, there are some sovereign clouds that stand out. The one in China was not even Microsoft, instead they have
What is Microsoft Azure operated by 21Vianet?
Microsoft Azure operated by 21Vianet (Azure in China) is a physically separated instance of cloud services located in China. It's independently operated and transacted by Shanghai Blue Cloud Technology Co., Ltd. ("21Vianet"), a wholly owned subsidiary of Beijing 21Vianet Broadband Data Center Co., Ltd..
Easy to imagine that if the USA politics does not change course, then Microsoft is perfectly capable of finding ways to accommodate complicated demands from their overseas customer base.