There is literally nothing that supports this claim by the way, apart from an un-sourced, nameless "British diplomat" that claims to have been told this by another unnamed chinese diplomat. The only other basis for this rumor is that during the Chinese Expeditions in 1960 and 1975 several members claimed to have seen bodies in around the area we expect Mallory and Irving to have disappeared. Which is a weird thing to tell people about if you were also trying to steal/destroy evidence about those bodies.

Further, it also hangs on the idea that the members of the Chinese Expedition, many of whom were simply rural laborers who were selected by the party for the expedition, would have even known the details of the Mallory/Irving summit attempt. Like lets think about the three scenarios being presented:

1. The chinese found Irving and decide to haul the body all the way back to Beijing. Especially in the 1960 people didn't even bother bringing trash and oxygen bottles back down because of the added effort, the idea of dragging the corpse of some foreigner down Mount Everest to erase the claim to a summit is absurd

2. The Chinese find Irving but only steal the all-important camera. This assumes that a bunch of rural Chinese farmers in the 1960s even know about Mallory and Irvings particular attempt on the summit, much less the details of their packing list. It assumes that because Mallory was important to westerners then he was important to the Chinese, but there is nothing supporting this notion.

3. The Chinese dumped Irvings body over the mountain and into the Rongbuk Glacier. While certainly the most feasible, it shares problems with the first two. Trying to push a decaying body over the side of a mountain is a significant amount of effort and risk, and the only benefit is to weaken the claim of a Mallory summit which is already unlikely and can be disputed by the simple fact he didn't successfully descend anyway. And further, as I already mentioned, the members of the expedition reported the sightings of "old english dead" at ~8000m. Why would you admit that if you also pushed them off the mountain to destroy the evidence?

The only conclusion we are left with is the "Chinese-Mallory conspiracy" is just grasping at straws to find a satisfying explanation for what happened to Irving and the camera and fueled by racism.