The WMF is not the only source of fundraising for Wikimedia chapters or other movement partners. Many chapters have successfully partnered with other organizations to accomplish great things in outreach and programming. Every chapter has the opportunity to raise money to achieve meaningful results in their area, even without a single penny from the FDC or GAC. It's clearly worthwhile to adjust the FDC process to protect against misunderstandings, confusion and hurt feelings. But we should acknowledge that such problems are both a symptom of growing pains in the FDC allocation process and utterly innate to any rationally devised method for selectively and judiciously granting funds.
In the specific example of WMHK, it is beyond dispute that the FDC reasonably criticized the plan to leap from zero to sixty in a single budget cycle. The chapter understandably faces major obstacles in engaging with institutions of civil society to further its goals; China is not a free society, and the mission of Wikimedia does not align well with the goals of government. It is, then, reasonable to seek some support from the wider movement - particularly given the importance of the chapters intended audience. But that support can and should be one of gradually building the chapter on a slope that parallels its activity and volunteer engagement.
It's not logical to assume that because the WMF has funds it should in some way equitably distribute those funds around the world. Supporting chapter operations, and funding offices and staff in dozens of countries, is not the chief object of the money raised from donors. We need to get away from the belief that chapters are unquestionably the best use of movement resources. There is a place for outreach, publicity, and targeted educational programs. But the WMF is best situated to supplement the efforts begun by volunteers, in the same way the WMF itself was created and has grown. It would be a poor use of movement funds indeed if the WMF decided to pour money into infant chapters with minimal development and fuzzy strategic goals. That's a recipe for, at an absolute minimum, good-faith mismanagement and waste of scarce donor resources. Avoiding this path was a very wise decision by the trustees, and I only hope they remain resolute despite criticism and Sue's impending departure.
Nathan