What would be a legitimate reason for the EU to allow these services?

You can't run a tower-based cellular network without a license, why a satellite-based cellular network?

Why wouldn't the US allow a Chinese provider?

Yes, the question is why not, not if, and you know it to be true.

Because the services are controlled by a hostile aggressor state, which less than two months ago made repeated threats to literally invade the EU? This isn't complicated, mate.