They don't want JAPAN in the region; there's just not much they can do about it at present. But Chinas consistent policy since Mao took over is that the US should stay the hell out of Southeast Asia; it's THEIR fiefdom, exclusively, to do with as they please. Any US aggressive US action is seen as an afront and a threat, conjuring images of the Open Door policy and the Opium Wars. Hence the capture of US Navy aircraft in international airspace and detention and debriefing of the crew while they dismantle and examine the plane and the US President begs for his citizens to be returned.

There's going to be a shooting war over this sooner or later, because neither the North Korean nor Chinese governments will take "no" for an answer (mainly because no one has ever said it to either of them and stood by it. ) It may simply be that America leaves South Korea and Japan to twist in the wind; after all, North Korea is still exhibiting as a "war trophy" an ax taken from a US serviceman whom they killed while he was in the DMZ to cut down a tree blocking line of sight. In other words, we basically stood by and watched the North Korean military murder one of our soldiers in cold blood rather than reignite the war, and they took the obvious lesson from that, hence proudly displaying the ax to anyone who'll look.

So, no, China's not going to sit back and let the US institute "regime change" in North Korea; if there was any uncertainty on that question, when they gave Pakistan nuclear weapons that should've dispelled the confusion. North Korea's going to continue to escalate (and arm) until we either fight them or exit the area, which is what China created them to do. All the talk about the horrors war would visit on Seoul is valid, but those horrors are coming whatever we do; the question is how bad we want them to be and whether we want them to end at some point.