I wouldn't normally pay attention to these kind of rumors, but last week one of Amazon's VPs was reportedly in China to talk import regulations with their government.
Amazon Global Vice President Marc Onetto was interviewed last Thursday and he said that they are in active negotiation with the Chinese government regulators, and they are trying to acquire the necessary permissions to import the Kindle into China. He also said that Amazon aren't planning to sign a local distribution partner but would market the Kindle from Amazon.cn.
There's no word on how negotiations with copyright holders are going, but I'd expect them to be ready to wrap up long before the government regulators make up their mind.
Now, the Kindle is made in China originally, but it's not actually available there. If the Chinese government allowed it to be sold there then they'd be allowing a chunk of the internal cash flow to leave. I'm not sure they will want that.
To be honest, I doubt this will ever happen. China are distinctly protectionist and mercantilist when it comes to their internal markets. The Chinese government wouldn't think twice about dropping a few billion dollars to bankroll a new industry in order to dominate it 10 years down the line.
I'd say it's more likely that a few months from now Hanlin, Hanvon, and the other Chinese ereader makers will each be offered a few hundred million dollars of capital investment. I think the Chinese government would prefer to spur the local companies in the market rather than allow the importation of what would be perceived as an American product - and more importantly - allow a US company to dominate the Chinese ereader market.
You have to agree, Amazon would quickly dominate the market. That's true anywhere they've opened a local store (US, UK, but France & Germany are still up in the air). The Chinese government would know that Amazon would dominate the market and I really don't think they'd like that.