Who a country favors in foreign policy is often a double-edged sword. Eg. US backs the Mujahideen in Afghanistan because the give the Soviets fits — but they win. An offshoot Mujahideen group decides to attack us on 9/11.
I think NK serves a purpose for China. It keeps the US fixated on dealing with the Nork-threat while they (the Chinese) get a strategic free-ride. But as you pointed out, there comes a point at which there are diminishing returns for China. If the locals (Japan, Philippines, Taiwan, Singapore, etc) get serious about their own naval & air (nuclear?) capabilities then China will find itself in a world of hurt.