It's sort of the same problem from different perspectives. If the UK deemed it could affort higher education without Chinese money, the UK would by default stand up to China, because of the incentives you describe.
I think the universities themselves are a problem, regardless of the societal aspect.
How I think about it:
Let us say, as a though experiment, that two things are true.
1. Outside of the university orgs, absolutely no one cares if the universities have enough resources to teach the engineers, scientists, teachers, doctors, etc. that society needs.
2. Outside of the university orgs, absolutely no one cares if half the people equipped to be good university teachers cannot find work.
In that hypothetical scenario, would the universities change? Saying no the Chinese etc. means that they would have to downsize.
