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I dunno, it sounds to me like you're jumping the gun a bit in this case.
Instantly coming to the conclusion that the Chinese government would target a relatively small, online company for the reasons given is a rather self-important reaction. A more feasible explanation, as touched upon by your player in China, might be that they did a broad ISP ban on another website carrying objectionable material (pornography, etc.) and Iron Realms simply got caught up in the net as well.
Heavy-handed, perhaps, but a far cry from the crazed government that goes around banning online gaming companies out of spite that's being portrayed here.
Not a flame, just an observation.
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