Clearly there are benefits to the Chinese having a presence in space. Space capacities would include GPS (independent of current GPS), satellite capacity for imaging/earth studies, possible strategic interference with other satellites (either jamming/damaging), to name a few. It points out the obvious: the US should not give up on space development and exploration. There are two many useful and strategic needs that can only be met through a space program.
Update: Xinhua News Agency reported this week that China has completed construction of the Tiangong 1 ("heavenly palace") space module. The 19,000-pound, unmanned orbiting laboratory is scheduled to be launched sometime next year aboard a Long March 2F rocket. Automated and crew dockings could follow later next year.