Space stations and exploration can be a difficult proposition to justify to any economic system; democratic, socialist, communist, etc. For China to want to "beat" us, building bigger and better space stations would somehow have to align with the current and future five year plans.
I would rather have China and the US pouring tons of money into space stations and exploration, but it is hard to figure out the rationale for such a massive investment. China seems to make rational decisions, those of which I am not defending. I am trying to figure out how rational a $500 billion dollar investment in a space station would be to Chinese interests.