Of course everyone is free to set such boundaries but usually D1B was marked by teams having a mix of professional and semi-professional players. Countries like Estonia, Lithuania, Romania, Korea (without imports), the Netherlands, Ukraine pretty much always fit this description. Croatia made a feature when they finally naturalized some pros. To progress to D1A you would usually need a fully professional team like GB, Poland or Korea (with imports) would usually attempt to have.
These are the lines that maped out the differences between divisions to me. Even if recent events shook things up a lot, they still remain true to me because at some point the world will come back to it and that's what the teams should strive for to get to the next level. China, as it is now, has very few players that would actually make it at the lowest level of European pro hockey.
Some of your arguments barely make any sense. Like:
staying in 1B "achieved as early as possible". So we are applauding the team for having a favorable schedule at the start now? Or acting like it's not the schedule that decided this?
" I see no team in Division 2 that could do more to challenge them than the opposition they've been facing now" - you don't see the Netherlands with 20 of their best players present challenging China more? You don't see Croatia with Katic, Rendulic, Idzan brothers etc. challenging China more? So what are you basing these assesments on?
Yes China was a good, disciplined team. And Estonia only lost to Ukraine 5-3 in a very close game in the OGQ only few months ago. And we finished 3rd in D1A 2 years ago. That's not how the strength of hockey country is measured though, is it? It's determined by a foundation it has for a continuos success and how is China doing there?
"Could just as well have been a 2:1 hockey game if China got one of their 15 shots in." - Yes and China could have lost both games against Spain and Netherlands since they got outshot in both. You either accept that was just likely as them scoring against Lithuania or your whole argument here is redundant.