I am a case designer for the iPhone. So for business reason, I've gotten an ATT activated iPhone fedexed to me in Hong Kong immediately after the launch. When I first booted it up, it automatically recognized our largest telco, PCCW, but I can't make a call since I didn't enroll the international plan. YouTube works via wifi with the phone, even when I popped in a different local SIM card. My other SIM card is a SmartTone-Vodaphone card. But when I come to China with the iPhone attached with the original ATT card, the phone does not even recognize any network and displays a "No Service" message on the top left of the screen. I tried YouTube over wifi, and I can get as far as searching movie clips with results, but when I select a movie and hit play, an "Error playing movie" message pops up. The connection wasn't a problem, since i can still play the same clip on my computer via the same wifi connection. Don't know if this experience may help your cause...

I am facing the same problem in China as well, but have not got the chance to try out in HK yet.

But will post a report again when I get back to HK again.

Very frustrated and confused, as to whether that is my problems, or the problems of the local ISP in China blocking !

I'm in china too and I have same problem (here below my yesterday's post).

http://hackint0sh.org/forum/showthread.php?t=9794

Youtube has been banned in China since the 17th of this month.
The reason is they want to promote a Youtube like Chinese website.

You still can access it if you use an external proxy (outside China) in your iPhone/iPod touch settings.