Need recommendation of drupal host for Chinese Users

You indeed want to consider where your primary audience will be. If indeed your audience is significantly located in Mainland China;

• If hosting in China you will need to register for an ICP number (http://en.wikipedia.org/wiki/ICP_license), which means as well that you will be subject to arbitrary shut down if you are not in compliance with the local regulations (aka you talked about something that does not sit well with the government),
• If hosting abroad you will need to ensure that you have a decent connectivity from China. You're lucky, AWS was already available for a while in Singapore and now has open shop in Japan (http://aws.amazon.com/about-aws/whats-new/2011/03/02/announcing-asia-pac...).
• If your demographic is mostly in China (like say 80%) with a decent amount of traffic, you'll probably be willing to ensure a proper speed all over China. To do so, you will need to consider serving content form two different IPs, each one serving one of the two main networks (China Telecom and China Unicom). Funny thing to do; see the north of China mainly relies on Unicom's network while the south is mainly China Telecom's, and interactivity is, well, not optimal.

Now if we're just talking about a small corporate site with mainly static content, I would not bother with anything I just explained; I personnaly hosted my company's site on Slicehost and had a pretty decent response time.

As far as I know Chinese gov no longer issues ICP numbers to individuals. You must be a registered Chinese company in order to obtain such a license. So if the entity registering the website is an individual or doesn't have a Chinese business license, then a China based server is not really an option.

I think you can put your host in Hongkong, don't need ICP issues.