As you say, control is a priority for the Chinese and hand in hand with that is economic dominance. China targets a industry by orchestrating technology transfers and weakening the non-Chinese competitors through espionage, subsidies, and basically any lever they can pull legal/illegal, fair or not. Anything to get the production in China, then monetize it and leverage soft power with it later.
If they can weaken Apple's value proposition, essentially breaking the walled garden, using the US legal system, that is a long run win for Chinese handset makers as Apple will then have the same morass of security and compatibility issues associated with more open app stores. I am simply raising the possibility that the lawsuit is best understood in the broader strategic context. Epic/Tencent knows it is a long shot, but to weaken Apple would support Chinese strategic economic goals. In this context, lawyers are cheap and they probably get points with the CCP leadership for doing it.
Yeah you are cutting with a double edged sword though. If the App Store opens up as you want, then the inherent security of the devices are compromised which would weaken communications and security for any nefarious activities. That seems fairly short sighted for an entity you are ascribing such massive intelligence and planning attributes. It would not be in their best interest to weaken the one entity than can unsure their continued secure communications at a global scale. Remember, if the situation you are describing is taking place, there are a lot of humans in the US that are participating and have to communicate by circumventing government surveillance and also have to be able to have a device be secured if they were ever caught. No other option for that if Apple goes away. It would be tripping over a dollar to pick up a penny. Why take down Apple when they can just work with them?