I really think you're oversimplifying the situation from the Chinese perspective.
https://www.washingtonpost.com/world/national-security/kim-j...
I suspect almost all countries that don't get military hardware from the US or Russia build their missiles with Chinese parts.
http://www.cnn.com/2011/12/15/world/asia/north-korean-labor-...
Russia gets slaves from them, thats why Russia protects them. China both profits from them, but also doesn't want to deal with Refugees. So they make the selfish act of letting the child run crazy.
How do you know the Chinese leadership's strategic thinking about NK? Also, that hypothesis doesn't explain the massive resources, including blood, they spent defending NK.
I don't think NK's 25 million citizen labor pool, likely operating at extremely low-productivity levels and less than 1/40th of China's, makes much economic impact. Nor does China want competition from cheap labor.
I consider NK to be a serious threat to the US and her allies but I think the Chinese do not consider NK to be a serious threat to the Chinese.
Imagine if Cuba decided to start allowing Chinese anti-missile defense systems at the US' doorstep because we weren't willing to deal with our ally Mexico regarding a conflict that didn't threat us.
The missile defense systems we deployed in SK could be used to track Chinese missiles. My point was imagine the outcry from the US if we perceived that the Chinese were tracking our missiles under the guise of tracking Mexico's.
It only makes sense for threatened parties to develop defense if not retaliatory measures. Imagine if the USSR never developed nuclear weapons while the USA threatened them with nuclear attack?