Map material from China not allowed to leave that country

I am not sure if the context of your question is really on-topic here, but since the answer and its implications is very much relevant for travellers as well, I'll give it a try.

The explanation you have read is not entirely accurate. The problem is that accurate map material is neither allowed to be published, nor to leave the country. The Chinese National Bureau of Surveying and Mapping require all companies to obtain permits for map surveying and published map data must be obfuscated, resulting in a deviation of up to 700m between the map and the real world. Sounds strange, but that is how it is.

You can easily see the result of this obfuscation if you e.g. in Google Maps look at the satellite imagery with a map overlay. It is especially obvious in border proximity, where you will see that the map data for China is skewed, while the map outside China is correct. If you look at this area, the Shenzhen Bay with the border between China and Hong Kong, you can see that the map over Hong Kong in the lower right area is correct, while in the middle of the bay, the map seem to indicate that the bridge makes a sharp bend to the right, while you on the satellite image can see that the bridge in reality is straight. In the upper left area (mainland China), you can then see that there is a significant discrepancy between the imagery and the map. Roads seem to float on the water, pass through buildings and what else not.

Some additional information based on questions in the comments:

The Chinese Surveying and Mapping Law does not explain why the restriction is in place. It is commonly quoted that it is for national security purposes, but I am not really sure if there is any official statement on that subject at all. Similar regulations and restrictions are actually quite common in many other countries as well, but usually do not apply to the entire country, just to 'places of interest'.

The obfuscation algorithm is prespecified, not publicly known, but is obviously deterministic. Since a lot of example data is available, there have been attempts to reverse-engineer the algorithm and there are more or less reliable software libraries available allowing a backwards mapping from obfuscated to real coordinates. There is more information and links to further resources on the Wikipedia page 'Restrictions on geographic data in China'.

China has some pretty strict laws (for national security purposes, it seems) related to mapping and geographical surveying, effectively outlawing it for non-nationals.

See OpenStreetMap's view of the topic.