But while huawei has pre-installed bitcoin wallets, it has no Chinese users.
So it doesn't seem to me to be a positive sign.

China is only and only  businessman which will take only and only those actions which serve the benefits in it's own favor.  It will allow only such actions which are beneficial to China though those activities may cause any big loss to any country or the people of any other country.
As stated in the news the Mobile company is multinational company; so it may be possible that they are manufacturing the phones only for exports purposes which may not be allowed to sell in China.
Access to apps like BTC.com’s is limited in China as the government blocks Android’s Google Play Store and some parts of Apple’s App Store.
So expecting any favor from China may just be day dreaming.

Even I am confused. I thought China sort of disagree with the idea of cryptocurrency, how are they able to get this proposal approved by their government?

I guess this is indeed how the Chinese seem to operate. It was the same with the exchanges. They just did it, no regrets. Eventually the government said "don't do this".

I think this is good news for bitcoin. I am sure those who use huawei phones in China will be curious about the bitcoin  wallet    in their phones. And this could attract more Chinese to invest in bitcoin.

I do not really expect too much from this news, because it could be that the market Huawei wants to take is not a market in China but outside of China, because it could be the terms and conditions set by the government of China will not change them is about Banned ICO and cryptocurrency...

A company in China is pre installing bitcoin wallets does not mean that the government is accepting the new market, i am really not sure why they wanted to crack down the entire market when they were planning to regulate the exchanges last year and i do not understand what happened after that, this news wont make any changes in the market because it is just a company seeing the trend and adding new application.

Here's the original article that started the news. They changed the wording after a couple hours.

https://www.bloomberg.com/news/articles/2018-05-10/huawei-is-about-to-give-chinese-users-easier-access-to-bitcoin

Here's someone who took a screen shot of the original article before the edit: https://twitter.com/Beautyon_/status/994673137370501120

Basically, Huawei will now offer a BTC wallet in their appstore. The price will definitely not surge because of this news.

“It’s a good opportunity to tap into the Chinese market. The use of cashless payments with apps is very big and the traditional banking system is lacking, so there’s a good use case for crypto payments to grow there. I like this statement in the made. I still believe whether they come in or not Bitcoin will do well... Presently dropping again but we should set our mind.. That it will surely goes up again. So we should take up this opportunity to buy and hold for more massive profit.

This is a good news. There are two sides here. (One), Chinese companies do it for their business. They come in the market of all the countries of the mobile world. They are just trying to hold that market. (Two), they may have been aware of Bitcoin, so it is thinking of using it. But nowadays it is not good to make transactions now.