The internet perceives censorship as damage to the network, and routes around it. If you become perfectly efficient at censoring connections, you isolate yourself.
Tris
Remember that it’s not only the users of the Internet that are geographically distributed. The servers are, too.
The Chinese are quite capable of using their laws to censor the contents of Chinese servers–if the penalty for hosting forbidden data is severe enough, nobody wants to do it. The censoring of incoming “foreign” data (where they can’t threaten the hosts with jail terms) is technically feasible if they cut it by source rather than content.
To explain that last sentence, trying to analyze the content of every packet (or set of packets) coming into the country would be an exercise in futility. It would slow things to a crawl and people would circumvent it using encryption or encoding techniques.
On the other hand, saying “we won’t accept any data from xyz.com (or, more accurately, from the IP address that maps to xyz.com)” is easy. It’s just an entry in a table in the existing routing equipment that uses negligible resources. This technique, known as “blacklisting,” is one of the handy weapons in our ongoing battle against spam.