Update:

Jill Tan, Asia Representative from Apple Inc. informs us that iTunes in China is now working. 

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As athletes downloaded the album “Songs for Tibet” from the iTunes store, in support of the Tibet cause,(the music is also good BTW), China retaliated by blocking the iTunes store in China, anybody who wanted to access the store got a error message.

The Apple Support forums were inundated by complaints by iTunes accounts holders in
China and here is a response one of them got from Apple support. 

My name is Bryan and I understand that you have not been able to connect to the iTunes store for the last couple days and that you are concerned that it would be an issue withChina blocking the iTunes store. I’m sorry to hear that and I’m happy to assist you with this today.

ITunes is not being blocked in China from our end, but access to the iTunes Store IS restricted in some areas inChina. This would also explain why it’s happening to your friends there as well.

I would advise that you contact your ISP about this matter. Please also note though that accessing the US iTunes Store outside of the geographic region of the United States is not supported, and that attempting to access it while inChina is at your own risk.The iTunes Store Sales and Service Policies are available for you to review:

Terms of Sale
http://www.apple.com/legal/itunes/us/sales.html Terms of Service
http://www.apple.com/legal/itunes/us/service.htmlThank you for being a valued iTunes Store customer. I hope that you have found the above information helpful and that you have a great day!Kind Regards,

Bryan
iTunes Store Customer Support  

Funny thing is that, according to China.org, the official government information site it is the Chinese citizens who are offended by the songs of Tibet album and they are the ones who want iTunes shut down,

A music album advocating “Tibetan independence” recently available for paid download on iTunes has ignited strong indignation among Chinese netizens.

According to Chinanews.com, the angry netizens are rallying together to denounce Apple in offering “Songs for Tibet” for purchase. They have also expressed a wish to ban the album’s singers and producers, most notably Sting, John Mayer and Dave Matthews, from entering China.

Many people have made remarks on online forums to express their anger, even those who have been fans of the artists in the past.

Some say they will boycott all Apple products from now on, including the popular iPhone, which is not available in China since negotiations among Apple, China Mobile and China Unicom broke down

This is completely opposite of what is happening at the apple support forums it seems to be a case of the Chinese authorities are continuing with their habit of blocking sites.

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We are trying to get word from Apple and will update you once we receive it.

h/t to informationweek