Good points! It should be noted that just because China did ultimately managed to get those projects completed by themselves does not necessarily mean that that was the quickest or cheapest way to do it. Something else to consider is that part of the reasoning for going with the joint-venture/partnership route was rooted in a desire to acquire advanced foreign technologies.
Had the Phalcon deal gone through as planned, then China would have gotten their AWACS years in advance and probably for cheaper. In addition, they would have acquired technologies that could have further enhanced what China could come up with independently.
It's a similar thing with Galileo, had China been granted the kind of access they have originally been promised, the Galileo project would no doubt have received further, and much more substantial funding from China, it could have fully opened up the European space market to China, as if China had been a full, equal partner, many of the Galileo satellites would almost certainly have been put in orbit by Chinese rockets, which could easily lead to further deals for unrelated launches. China might even have been able to use that opportunity to build trust and support for them to become a full member of the ISS instead of having to develop their own space station programme, which again, is a nice boost be comes with a hefty price tag and will yield fruits many years later than if China joined up with existing international projects.
I think it would be a grave mistake to think that the Chinese are so one-dimensional or insecure as to make such large strategic decisions for something as simplistic or unnecessary as feigning naivety or assuaging foreign fears.
In violating the spirit of the original co-operating agreement as they did, the Europeans served to harm their own interests far more than China's. As has been mentioned in the articles posted, that betrayal led to an across-the-board cooling of relations and co-operation from China. I do not have time to check, but it might be interesting to see how Chinese trade with Europe developed in the years after the deal, especially in cases where European products were in direct competition with other makers for Chinese orders. Passenger airplanes would be an obvious barometer, were there noticeably more Boeing orders compared to historical trends compared to Airbus?
Even if there were no obvious and massive trade impacts, the total withdrawal of Chinese funding and expertise no doubt massively delayed and hampered Galileo. It is no accident that the project is both over-budget and failing deadlines - the budget was likely adjusted (read massively cut) following the Chinese withdrawal, and as a consequence, the deadlines were steadily missed because of a lack of full funding and Chinese expertise in addition to all the bickering and red-tape already pointed out in the interviews.
Let's not forget that Galileo is primarily a commercial venture. That means it needs civilian, fee paying customers to be successful or else it risks failing to achieve the critical mass needed to make it a viable project. Part of the primary reason for the ESA to invite China in the first place was the hope that after it becomes operational, Galileo would effectively corner the Chinese market because of China's well-known distrust for US GPS.
As in most fields, Europe and the US are mature if not declining markets with very limited growth potential and profit margins, and it is the fast developing economies, and primarily China that has the fastest growing market with the greatest future potential for continued long-term growth.
By massively pissing off China with their little U-turn stunt, the ESA has effectively terminated any chance they have of making any meaningful inroads with Galileo in China. No Chinese government contract would ever be award to Galileo, and no sizable private sector companies would want to do business with Galileo knowing that it is on the Chinese government's shitlist.
Hell, it was probably no accident that Beidou uses some of the same frequencies as Galileo, thus it could well be that commercial users in China could not use Galileo even if they wanted to. This frequency clash will also not be restricted to just China, but globally. This might mean Beidou doesn't work well in Europe or America, but then Beidou was never realistically going to make any meaningful inroads in those markets anyways. However, for the rest of the developing world, that may well offer up an effective ultimatum where they would have to choose between China and the EU. With the way the two projects are developing (Beidou will be operational first, thus will have a critical first-mover advantage, and by the time Galileo becomes operational, it may well be that Beidou is already well-established) and how the political, cultural and economical winds are blowing, odds are most will side with China and shun Galileo if it came down to such a choice. That further hurts Galileo commercially.
If Galileo cannot generate enough income to be self-sustaining, it becomes a constant drain on the public finances of the project governments. Even without the current EU financial crisis, it would have been likely that member governments would start to tire of constantly forking out massive amounts of cash for something that is essentially redundant because the Europeans could just as easily rely on the American GPS. All that would lead to cascade effect whereby the more funding Galileo needs, the faster member states would cut funding or pull out altogether, and in a few years, when the first satellites start to reach the end of the service lives, the ESA might not be able to put together the funding to put replacements up for them all, and the whole systems starts to fall into disrepair, which would start a vicious circle of driving more customers away and putting more financial pressure of the host nations. The whole system could easily flounder like the Soviet GLONASS in the years after the fall of the USSR. Only without the kind of military ambitions of Russia, it would be unlikely that there would be sufficient resolve to find the funding to resurrect the programme.
Too late, the ESA realized the full implications of their decision, which stems from the kind of casual under-estimation of Chinese ability endemic in the west, especially in the higher political circles where dusty old men look down their noses at China and needs to believe that the only reason China is advancing so rapidly has nothing to do with the hard work and ingenuity of the Chinese and entirely down to them cheating somehow (which also spills into things like sporting achievement, but let's not get into that here).
The ESA were probably smuggling thinking, "and just what can they do about it if they don't like it?" when they decided to 'uninvited' China. I am positive that none of the decision makers would have even dreamed that China could develop it's own GSNS, never mind have it operational before Galileo.
Few of the factors I listed above would have come into play had Beidou not existed. China would have no alternative but to look to Galileo if it didn't want to rely solely on GPS, and there would not no competition for other developing countries' business.
You can almost read the rueful regret in the ESA panelists' comments, or rather lack of comment on the issue. Because of it's under-estimation of China, the ESA not only directly hampered the development of Galileo, they also seriously undermined the commercial viability of Galileo by shutting themselves out of the Chinese market, and also helped to create a powerful long-term competitor out of a potentially useful partner.
The ESA knows better than anyone the depths of their error, and for them to not even want to talk about it suggest that there is more at play than them trying to spare the feelings of the Chinese. The Chinese for their part, having exacted their revenge by showing the ESA up and potentially massively undermining the commercial viability of Galileo, would hardly want to gloat about it to the face of the ESA. That would be considered as unbefitting and petty in Chinese culture, which proscribe that the party that got the upper-hand in a dispute should act graciously to the defeated rival, both to underline the full-spectrum superiority of the victor, but also to extend an olive branch to the defeated. Not all Chinese proscribe to these views and conventions of course, but one thing you have to give Chinese officials, they always aspire to take the most gracious approach in international dealings. Where China has gotten the upper hand at least.