I would put more of the blame on the Chinese government than Nintendo. The government even put about a year stop on approving games and only started reviewing more games recently. There is a huge backlog and many small developers in China went belly up because their games were never approved and put on hold. Look at Tencent which got hit hard due to drop in revenues due to the government putting a temp ban on approving games. To simply caste Nintendo as the problem of not localizing games is a false interpretation. Sure they might have some to blame but I would put majority of blame on the Chinese government. I understand they are worried about their people becoming addicted to games but they need to revamp their approval process. Most Nintendo games are family friendly so they should easily be approved yet I'm sure they have to jump through ridiculous hurdles for the Chinese government.
I'm pretty sure domestic policy decisions weren't to blame for Nintendo's past localization performance over there since China didn't actively block the approval process like they did now ...