If Tesla wanted, they probably can let the Join Venture do some assembly works and keep critical battery, Self Driving SW, etc IP to the main company.

Not much diff than AirBus has join venture in China for some Airplane assembly works. But it certainly didn't share all the Jet Engine technology, Filght Control Software etc with the Join Venture in China.

China knows that it has big market and would like leverage to get more benefit from western companies who like to access that market.

It is just business.