I think it is daft to ban them from the ISS myself. It’s a US policy. The ESA want to work with China with their lunar village. I see space as like Antarctic exploration and like the Olympics. The astronauts and space engineers are not responsible for the politics of their country - no more so than US astronauts are responsible for water boarding, electronic snooping, and unmanned drone strikes killing innocent civilians in Pakistan.
In the UK where I live, I was not at all in favour of either the renewal of Trident, or our country’s decision to take part in the war in Iraq. Yet that doesn’t subtract at all from my pride in our accomplishments with the Titan Huygyens probe and the Philae lander and other missions as part of the European Space Agency or so close to success with the Beagle lander on Mars, or have any affect at all on my support and interest in Tim Peake’s spaceflight to the ISS.
As in the field of sports with the Olympics, this is an opportunity for ordinary people - or sometimes extraordinary people, in many different countries and political systems to work together, or compete together and find mutual interests and admiration on a personal level.
The Chinese technology is at an early stage, nowhere near Apollo capabilities. But it is capable of sending astronauts into space and they have launched ten astronauts to orbit so far, in five missions, with not a single fatality or serious incident. That’s a good start. They have done space walks and docking maneuvers. They are also the only ones able to send an astronaut in space currently apart from Russia. And they have sent the first rover to the lunar surface since the Apollo era. We should see many more of those next year from non government companies and organizations in many countries world wide for the Lunar X prize, but still, China will remain the first to send a rover to the Moon in this century and indeed for several decades.
I think that what the Chinese have done is impressive. And I think we need to work together with them just as we do with the Olympics. Which doesn’t mean at all that we approve of the various human rights violations. In the same way you can accept and admire the US spaceflight accomplishments and astronauts, without any need to feel that this means you approve of all aspects of US foreign or domestic policy.
I think we need to keep in mind that Chinese citizens are people like us. And they are not responsible for all the things their governments do, any more than we are responsible for what our governments do and some of them may indeed have got into trouble trying to protest about such things.
I think it’s also especially important in space that we find a way forward within the spirit of the Outer Space Treaty, of mutual exploration of space for the benefit of all humanity. Which can involve competition just as for the Olympics and Antarctic research. Space exploration especially is a field where we need all the help we can get. The ESA village idea has astronauts from many different space agencies close together where they can support each other and make use of shared resources such as 3D printers, and solar power arrays, as well as provide additional medical help and other forms of on the spot expertise in a difficult situation or an emergency. I think this is surely the way to go rather than separate bases spread out over the surface of the Moon. As with the ISS this should lead to mutual respect and tolerance and awareness and friendship in space between the astronauts which can to some extent transcend the many political divisions on Earth as they look at the distant Earth and see it tiny in the vastness of space and with no political borders visible from space - at least, certainly not from the Moon.
See also my Case For Moon First