This Maoist doctrine of "People's War" where you draw the enemy into your own territory should have died with Mao. Unfortunately, Chinese people are masters of making virtues out of necessities long past the point where the "necessities" are even applicable. It's completely pathological and irrational thinking, like a billionaire who compulsively clips grocery coupons. It's also the reason that China still doesn't have a nuclear arsenal commensurate to its stature to this day. A lot of Chinese people seem unable to believe their own success and it's a sorry sight to see such a loser mentality.
Would the US adopt such a strategy if Mexico harboured serious ambitions of reconquering the territories it lost? If a US general suggested the US army should "lure" Mexico into Texas and California before routing them, he'd be shot on the spot. If China observes India making serious preparations to invade China beyond these silly border games, China destroys India - end of story. It is repugnant to even consider a single Indian boot (or flip-flop, given the state of the Indian "army") on uncontested Chinese soil.
It's not the same case, areas close to India in south Tibet unlike Califonia and Texas is nearly (If not completely) uninhabited.
Given the huge gap in tech, China could also set up a kill zone on the Indian side of the border, but it would be valid to set it up on the Chinese side of the border as well. Allowing India to cross a small bit into uninhabited and unfamiliar Chinese territory before starting a combined arms attack.
Doing so would be more safe than having PLA set up an encirclement in unfamiliar Indian soil. If a war kicks off, based on other conflicts between developed and non developed militaries, we're looking at most likely dozens to high hundreds of casualties for China. Whether it will be the former or the latter depends on how clean China uses its advantages.
America and saudi used this strategy against Iraq, where they baited iraqi forces into invading Saudi Arabian territory first, so they could be destroyed in a short amount of time. But its questionable if India would fall for the same trick if a war actually started.
