You need to have a little bit of perspective on this. Lets take a step back and take a look at how it really went down.
This was a Taiwanese stream and Blizzard China was in full damage control mode to try to mitigate fallout with the Chinese people and government. You have to understand, everything is ultra nationalistic and either you support China/Government/Chinese People or you're against them. Blizzard doesn't want trouble with the LARGEST growing gaming market in the world. Thus they put out a statement saying that they're all for the chinese people and that this kind of behavior will not be tolerated. Blizzard China was in their every right to kill the stream, fire their interviewers for facilitating the interview and stripping the player of his money. This was in the TOS rules for competing in the Heartstone Grand Finals. You can't just hijack a gaming platform that is owned and run by a company to voice your highly controversial views (in china) and not expect to be punished. Likewise, you can't go into a live CNN broadcast and curse out congress and throw out death threats without expecting to be censored and banned from CNN in the future. This isn't an argument for or against free speech. This is a case where the participants clearly broke rules and are getting punished for it.
Now the real problem for Blizzard US is how to respond to something like this. They're screwed if they stand behind Blizzard China with the western audience but they're also screwed with their Chinese audience if they backpedal on the original stance. It's just a crap situation all around.
Blizzard doesn't want to talk politics. They don't want to take sides on a hot potato issue. In fact, as a publicly traded company, they shouldn't take sides on issues like this. This isn't an instance where Activision is stepping in and telling Blizzard how to act.
Blizzard trying is walking a fine line between Chinese and American cultural differences and accepted norms.