At this stage paradox probably wants to cut ties but knows it can't. China defends their own and stolen art assets into a contract breach won't allow the company to recoup even the likely legal costs, let alone sunk investment, assuming it even is successful. The more likely outcome is paradox gets to dump whatever minor unpaid obligations if any, say goodbye to any owed them, and watch anything they put in dev or programming wise get taken and reused without apology in some other title before long.
I don't blame paradox for wanting to branch into mobile, even for p2w mobile. I don't blame them in any way for the ip theft and further assume they really do care and are trying to put a stop to them. I blame paradox, the very top at least, for a MASSIVE failure in judgment. This isn't uncharted territory. This is what these companies do, what even the most ardent trump haters end up conceding to agree with him on china doing this to others, this is something anyone could have seen if teaming with them, and it was literally done by the very company, with stellaris assets. How can you not see this coming?
The only hope now is to patch up any potential legal liability, plug any further sharing of intellectual property, and recoup whatever they can when this seemingly abortion of a game attempt opens it cash shop.
Personally, I will still trust the devs/staff implicitly, the best in the business... but paradox suits I now have to believe are idiots.
Hire more programmers and artists, rent more office space, have a mobile games team. Don't sell your soul to a chinese company already known for lack of ethics. Come on.