Your scenario is actually quite plausible. Treaties and all else aside, there is historical precedent back to the dawn of time that when you get down to brass tacks, territory eventually belongs to whoever takes it and can hold it against all comers. This is not politically correct, or even the most desired way to settle a land dispute, but it's true nonetheless.

China, or any other nation, could possibly defend the entire Moon against all comers, given a sufficient supply of guided missiles or some other kinetic weapon. Anything traveling from the Earth to the Moon is a big, fat, sitting duck on a fixed trajectory for a couple of days while in transit.

Personally, I don't think China would try to pull this off. I'm not sure what the point would be, politically or economically. I don't think China is going to the Moon in a big way anyhow. Chinese in orbit, yes, maybe even a space station. About then the money's going to run out.

Heinlein's "The Moon is a Harsh Mistress" is practically a case study of this kind of situation.