The NBA, seeking to balance its interests in the Chinese market against American free speech values, found itself squeezed by both sides in a reflection of the broader tensions between the global superpowers.
The league intially put out statements that senior US politicians slammed as bowing to China for financial reasons, while Rockets star guard James Harden apologised.
But NBA Commissioner Adam Silver on Monday insisted his organisation supported Morey's right to express his opinions.
China's Communist Party-controlled broadcaster responded on Tuesday, announcing it had shelved plans to broadcast a pair of pre-season exhibition games to be held in China this week and was considering more punishments.
"We believe that any comments that challenge national sovereignty and social stability are not within the scope of freedom of speech," China Central Television (CCTV) said on its social media account.
"To this end, CCTV's Sports Channel has decided to immediately suspend plans to broadcast the NBA preseason games (China Games) and will immediately investigate all cooperation and communication involving the NBA." Chinese Internet giant Tencent, which streams NBA games to hundreds of millions of fans in China each year, quickly followed suit.
Also on Tuesday, a number of Chinese actors and singers said they would boycott the two exhibition games pitting the Los Angeles Lakers against the Brooklyn Nets.
An associated hashtag, "Several stars quit NBA games", was the most-discussed on China's leading social media platform Weibo on Tuesday morning, with more than 350 million "reads".
China's government said Morey's tweet was "wrong".
"How can you have exchanges and cooperate with the Chinese side without understanding the (mindset of) the Chinese people. That's not going to work," foreign ministry spokesman Geng Shuang said at a regular press briefing.
Nets players, executives and NBA China officials were to appear at a publicity event at a Shanghai primary school on Tuesday afternoon, but the league abruptly cancelled it just two hours before it was to start, giving no explanation.
Meanwhile the Global Times, a nationalist paper known for communicating the ruling Communist Party's attitudes to the world, issued a blunt warning to global firms that speaking out on human rights and other sensitive issues would cost them market access.
"The problem is that Morey's freedom is at the expense of (the) Rockets' huge commercial interests, which the team is unwilling to give up. It's a paradox with which Americans are grappling," the editorial said.
"The biggest lesson which can be drawn from the matter is that entities that value commercial interests must make their members speak cautiously." In his first public comments on the controversy, Silver late Monday spoke in support of freedom of expression.
"I think as a values-based organization that I want to make it clear... that Daryl Morey is supported in terms of his ability to exercise his freedom of expression," Silver told Japan's Kyodo News agency.
"There are the values that have been part of this league from its earliest days, and that includes free expression," he added, speaking in Japan, where the Rockets and Toronto Raptors play several exhibition games this week.
However the NBA's initial statement in English on the furore said it was "regrettable" that Morey's views had "offended so many of our friends and fans in China".
A Chinese-language version of the statement went further, saying the organisation was "deeply disappointed by the inappropriate remarks".
In the United States, Democratic presidential candidate Beto O'Rourke, a Texan, deemed the NBA's initial statements an "embarrassment." Florida Senator Marco Rubio, a Republican, also accused the NBA of throwing Morey "under the bus" to "protect (the) NBA's market access in China".
"This is bigger than just the @NBA. It's about #China's growing ability to restrict freedom of expression here in the US," he added in a series of tweets.
And Senate Minority Leader Chuck Schumer, a Democrat, warned "no one should implement a gag rule on Americans speaking out for freedom".
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