Musical.ly (stylized as musical.ly) was a social media service headquartered in Shanghai with a US office in Santa Monica, California.

https://en.wikipedia.org/wiki/Musically

Does this mean China is correct in censoring information and social networks?

Did you check? https://en.wikipedia.org/wiki/Wholly_foreign-owned_enterpris...

Yes. Notice that there are restricted enterprises?

It also doesn’t have anything to do with the banning of US companies.