China can SPV mine, which they do already, but it is risky and puts them at a further disadvantage.
Why? They can control the pool abroad.
A pool abroad is a loser. It just adds latency.
That doesn't add any latency that they wouldn't have already with small blocks.
Yes it does. Block is solved in China. If it is sent to a mining pool in China, that mining pool and the other ones in China receive it right away. If it has to go over GFW twice, as would be the case with a pool node outside China, then there is added latency.