How is China messing up the coordinates on Google Maps? Have they just given faulty coordinates in the map data they have sold/given to Google?

To be precise, China is not messing up with Google Maps. Chinese government forbids geographic survey from anyone who is not licensed to do so. Currently there are only 2 companies have the license. Both are state own companies. That means all maps in China is under control. All the maps in China use the GCJ-02 coordination instead of WGS-84 coordination. Google Maps uses a GCJ-02 map for China (From NavInfo, one of the 2 licensed companies). That's why GPS coordination for POIs in China put on Google Maps will be some where off. The mapping between GCJ-02 and WGS-84 is not a linear mapping. The algorithm is confidential. But in the past years, significant progress has been made in understanding this algorithm. There's code readily available in the internet that does the coordination conversion.