I honestly have no idea, #2. But as you say, when you're ostensibly a communist dictatorship playing at capitalism, it's much easier to direct your human labour capital as you please.
I know I've in the past been exposed to the idea of controlled Chinese diaspora, in which the government selects or encourages individuals to go out into the world, get degrees/work in tech companies/etc, and then bring that knowledge back to China.
But honestly, I don't have very much insight into China specifically. I remember stories when I was in Japan regarding many Chinese still vehemently hate Japan for historical conflict brutalities (I think during my 2009 trip there was contemporary news of Japanese tourists having stones thrown at them in China).