Did SMIC get 7nm to yield or is it limping but propped up for PR purposes like Intel 7?

It's in volume production. This is what Huawei uses for its Mate 60 phones. They've sold 30 million units. From articles I've read the features on the chip are actually quite precise, which lead people to think the yield is at least decent.

How they will get to 3nm is another question but back when Intel made its decision, 7nm was on the horizon so choosing to not go the EUV route is not as dumb as it may look now.

The latter. China isn't even close to achieving high-yield 7nm.

7nm means nothing, it's an arbitrary marketing number