The WBC should be intended as a way of promoting the sport of baseball worldwide. Having China compete in the WBC is great for growth of the sport in the world's most populous country. I know that MLB would love to see a Chinese star in the majors. Much like the Yao Ming/NBA scenario, success breeds imitation-idolization, which would ultimately lead to a huge potential increase in MLB revenues. Bottom line: MLB views China as a huge untapped market.
Unfortunately, when sports - $$$ - and politics collide, something has to give. In this case, Taiwan has been forced by MLB and China to cede it's name, it's flag, and it's national anthem during the WBC. This is nothing new to the people of Taiwan. Ever since the IOC's ruling in 1979 to recognize China (P.R.O.C.) as a member of the IOC, Taiwan has been relegated to the status of a "secondary citizen" and is forced to be recognized under the title "Chinese Taipei."
Every time I see Taiwan's unis - with it's Chinese Taipei logo - it reminds me of the socio-economic political clout that China uses to bully around it's island neighbor to the east.
Good read on a controversial subject that hits home with me.