"...it is not in our interest to allow this sale."

That may explain why the price was so much higher than expected.  And you are correct about China's biforcated government, in that their military answers to no.  It is self supporting via it's business ventures (legal and otherwise), taking nothing from the central government.  

This is certainly a dangerous situation to our Western way thinking in having a major military power loose on the world as a power unto itself.  While China may be a member of the UN, it's military, as a separate entity, is not. 

"Danger, Will Robinson, danger."