Of course the answer is going to differ, depending on who you ask, but most customers are going to find that China is in fact a great location for autos, and the car industry in general. Due to the fact that many parts are made there, many cars are produced there, and many new technologies are found in the region, this brings more and more to the consumer, and allows them the option to find a variety of new vehicles, that are not produced where they live, for a reasonable price, when they are ready to choose a new car they want to buy.
As far as manufacturers are concerned, the market in China is a great threat. Due to the fact that so many cars are coming out of there, and because there are so many manufacturers trying to increase their sales base, China is a threat, and is always going to be seen as one, because the customer relies on their cars, and are used to buying the vehicles that they offer in production; this means customers are willing to pay more for their safety features, and fine new vehicles, and are less likely to buy from other manufacturers in their own local market.
As with all questions, the answer to the question Is China good for the overall car industry? will depend on who you ask, and what point of view they are taking on the question. For consumers, the vehicles that come from the country consistently deliver, and are efficient, low priced options. For competitors and other nations, the cars are a threat, due to the fact that they are stable, reliable, and have been in production for so long, that all customers are bound to trust what they get, when they buy a Chinese manufactured vehicle.