Why was it confiscated? Because political messages aren't allowed at the Olympics.
Why is it political? Because China does not recognize Taiwan's independence, and holds much influence over the games. Taiwan competes under the name of Chinese Taipei at the Olympics, and beat China for the gold in doubles Badminton.
Then the name china can't appear on apparel either it being just as political in reference to the same situation.
They only compete as Chinese Taipei because China has leaned on the commission to not recognize their nation even while self governed. It's the UK telling Canada they can't have Canadian merchandise and have to compete under their Commonwealth name.
I say we remove mainland China from the games entirely. They can control their own games they host and tell everyone they don't like to fuck off (they won't have to, nobody likes Beijing, nobody would go).