And now they approved the app
And China's state run media condemned the action. Which is the worst of both worlds for them, the app got the publicity and then Apple was seen publicly acting against them which causes China to lose face. I imagine that particular story is far from over.
Still, Apple does employ a lot of people in China so they can't crack down too hard or they risk Apple taking their manufacturing elsewhere - Foxconn is a Taiwanese company not Chinese so Apple wouldn't have to switch manufacturing partners, only manufacturing location. And Apple is such a big force in that market, that they could get suppliers to move out of China as well.
So I think Apple calculated that the Chinese can only wag their finger, but can't take any actions. Maybe they can play the "patriot" card to their population, but this is different than the trade war where a patriotic appeal can work - most Chinese know what is really going on in Hong Kong, and aren't going to hate on Apple for going against the Chinese government in this instance.