"just how far the Chinese government is prepared to let them lag just to develop home-grown technology".

Once upon a time all state of the art airliners were American. This type of monopoly has problems, especially when the government of that country is unreliable (you might get on the "banned technology" list on a whim). You grow and maintain your own technology base and if you're lucky you'll make money, too. (EADS may be a waste of space for the typical British Aerospace money manager but it seems to be an OK business for everyone else.)

The Chinese are being smart. Hedging their bets and providing local employment.

It wasn't that long ago that people used to smirk at quirky, backward and just plain weird Japanese cars.