Even a public university can decide what they want to do when it comes to punishment for students they admit. You aren't owed an explanation no matter how much you pretend on the internet to care.
A public university has to respect the constitutional rights of it's students though. So there would be very strong legal protection for pro China students.
Edit: actually not sure if they are foreign nationals. Maybe someone knows if same applies?
The issue is of harassment and continued education at Purdue; not constitutional rights. It sounds like the pro China students were harassing Zhihao Kong. Purdue can decide what constitute harassment. 100% it's part of of every contract the student signs and agrees to as a part of their acceptance.
People have no problem bending the rules to punish people swiftly if it benefits them. It is only when it would be painful to do the right thing that people insist on their legal limitations.
This is a false statement. The only regulation here is title VI and title IX. The administration of a public university is not legally part of the government.