My guess would be, mostly internal propaganda, sort of like a military parade on steroids. Moon is a lifeless rock, any mining operation there would be absolute light years away from being economical, never mind that it may well be logistically impossible to get the necessary mining equipment there or maintain enough people there to run any sort of mining operation. Any 'permanent settlement' there would as far as I see it be their own version of ISS, with hookers and blackjack, just based on a big asteroid rather than floating in space. I can't see such a 'settlement' having a population of more than a few astronauts. So very little practical benefit to be gained.
China's economy may be doing better than Europe's or US's in some ways, but they have their own problems, the growth is slowing down and there is a fair amount of domestic discontent. So they're probably looking for an impressive piece of propaganda to distract the population. Taiwan invasion could be one but they're probably realising the heap of problems it would bring. They're learning from US and Russia's mistakes I guess. So a moon base (just like in scifi!) would have pretty impressive propaganda value.
My guess would be they may decide it's not worth it. Supplying such a base would be massively expensive. Also, my knowledge of this is limited, but wouldn't there be additional logistic challenges in resupplying a ground-based base as opposed to a space station, due to the Moon's rotation? If the goal is propaganda, then any catastrophic equipment failure resulting in (probably quite unpleasant) death of the population of the base would be a significant loss of face. So I guess the plans to have a permanent base by 2040 or whatever will remain just plans. Although who knows, CCP has access to significant wealth which they can spend absolutely however they want and pretty impressive know-how, so depends on how much value they place on this I guess.
