the goal is legal residency, not illegal overstaying. the universities offer the path of: pay money, get a visa. by not teaching anything, the "students" are free to go work and earn back the outrageous tuition fees, or if they're rich enough, just go enjoy life around europe.
free (long term) movement/immigration for the people to anywhere desirable is dead in the modern world, you generally need to pay (golden visas, "education") or be paid (work visas).
The vast majority of Chinese students do not plan on migrating to the UK. They usually do it so they can complete a Masters in 1 year instead of the 2 years required by Chinese universities. Having an international degree also holds weight in the domestic job market.
The visa is (a) not permanent and (b) only valid for the UK, which was never in Schengen; if you are a non-EU national you need to get a visa for each European country you plan to visit, separately, according to their rules.
free (long term) movement/immigration for the people to anywhere desirable is dead in the modern world, you generally need to pay (golden visas, "education") or be paid (work visas).