They fully comply with Chinese requirements if you subscribe to iCloud in China, and they do this quite transparently. They do not, notably, say they don't share anything with China and then go ahead and do it anyway.
Unless Apple is straight up lying about their technology and encryption methods used to secure iCloud and their hardware, the issue of a public standoff is moot, because Apple couldn't help them if they wanted to. And while perhaps it's possible that Apple would lie to consumers to please US law enforcement, it's a bit of a stretch to say that because there haven't been any high-profile cases where law enforcement tries to force Apple to give up what they don't have, that this must be evidence that they're in cahoots.
