IMHO only, not an expert/informed analysis: Buddhism can be a risk to Chinese harmony if left to a separate authority (the real Dalai Lama). The Chinese grand social experiment of a strong state can only really work if they are relatively culturally homogenous, whether in Tibet or Hong Kong or Xinjiang or Taiwan. Dissent plants the seeds of change, and the CCP's system doesn't work when there is too much diversity of values. It's uber-collectivism in the name of the nation.
China very rarely does anything in the name of short-term profit. Their government doesn't work on 4-year competitive cycles like ours does, they plan and orchestrate in decades, and to them it's safer to conquer and assimilate other territories while they are still underdeveloped than when they become too powerful, either economically (like Taiwan) or culturally (like Tibet) or both (like Hong Kong). Having a puppet religious master under their control, along with all of Tibet's future economic output, is reason enough to seize it, even the real gains won't be realized for another few decades. The artificial legitimacy of Chinese-controlled Buddhism would greatly expand their cultural sphere of influence both inside and outside their immediate borders.
China very rarely does anything in the name of short-term profit. Their government doesn't work on 4-year competitive cycles like ours does, they plan and orchestrate in decades, and to them it's safer to conquer and assimilate other territories while they are still underdeveloped than when they become too powerful, either economically (like Taiwan) or culturally (like Tibet) or both (like Hong Kong). Having a puppet religious master under their control, along with all of Tibet's future economic output, is reason enough to seize it, even the real gains won't be realized for another few decades. The artificial legitimacy of Chinese-controlled Buddhism would greatly expand their cultural sphere of influence both inside and outside their immediate borders.