> What’s the evidence for which way causality works?

One qualifier would be "at scale and profitably."

But for more detail, yes, the situation has changed over time and probably the reasoning has changed over time.

McGee spends a lot of time on the difficulty for Apple R&D to keep up with Apple design bureau's demands. To the point that Apple execs arrive at decisions that for the sake of internal peace and meeting deadlines, Apple Industrial Design is not to make arbitrary demands (like they used to) and must consider manufacturing realities. Which still leaves Manufacturing struggling at every step to keep up. So - usually - manufacturing is very much pushed to the edge of what's possible by Design. Even though Apple teach China phone manufacturing (again "at scale and profitably"). Design are the ones pushing. Whether Design is really concerned with keeping ahead of competitors... is not explicitely told by Apple people. They do seem to love "impossible". In my recollection, it's more McGee's observations and conclusion.

Apple mainland China companies competition has also been a widely varying quantity. In part due to Chinese fashion trends and in part due to Apple political difficulties in China (which come and go). Underlying should be "at scale and profitably": Apple rightly shouldn't care if a few exotic phones come out. That wouldn't matter to their bottom line. They are described as caring when there is a flood of matching phones coming out - and even then with some latency.

Overall btw, "Apple in China" is fantastic. With massive amounts of local color and "story viewed from the Apple China people's side". Lots of bits that were missed if you mostly followed Apple from the side of what we see in the US.