It's wrong to assume that the market will become flooded by Chinese carriers. Beijing doesn't like their carriers competing directly with one another, so not everyone is allowed onto the Shanghai and Beijing route. Virgin, on the other hand, has the rights to Beijing, which is what appeals to HNA Group. They can link into Hainan Airlines/Capital Airlines' massive hub in Beijing, and only have Qantas and Air China to compete with.
This agreement will open up new city pairs, and it will be the Chinese carriers going nuts, but that's all good for Australia's domestic carriers.