“Its impossible to know for certain. China would never admit to such a deal, nor would Gu or her representatives. Chinese law states that duel-citizenship is not allowed. But does that matter to the CCP?”
You don’t have to be a citizen of the country you represent.
IOC approved her application to represent China.
That's fairly common, isn't it? Wealthy athlete wants to be in Olympics, not good enough to get on his country's team, signs up with some small country and brings enough dough (or sponsorships) to make it happen. There are minimum performance standards to qualify, but it's often possible.