Warner was the one who has decided the outcome of the HD DVD - Blu-ray War. I think they enjoyed their role and want to play it once again.
Assuming that remastering from Blu-ray to the Chinese AVS format does not cost too much, what do they have to lose by supporting both formats?
They will make money either way, and if anything, will prove their importance once again.
It is a good ploy by warner. They use the HD-DVD in Chinese and keep BD piracy down. If all the Chinese are busy pirating HD-DVD, BD will be safe in the rest of the world.