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China Decides iPhones Pose a National Security Risk
(www.pcmag.com)
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Even if they disabled E2E, the data would still be encrypted, and they wouldn't have the key to force it to decrypt. Also, removing that feature would royally piss off their customers that they sold "security" to for a decade+.
Personally, I use their cloud storage. IMHO, the risk is low and the convenience is worth it for me, as someone in the US.
Since it's all closed-source, we don't really know that. Apple also controls the OS of your device so they could easily push an update that sends your key to their server.
Apple has many privacy issues, but this ain't one of them, in my opinion.