Sources I can find are saying that the hospitals were a little less than half full by Feb 12th:
China boasted that it built 2 new coronavirus hospitals in 12 days. But they're treating less than half the people they're supposed to.
That's 1100+ beds that didn't exist without them, that's 1100+ people who have a much worse chance of surviving without medical supervision.
There's a chance that business insider could be misinformed or that the ~1100 number is propaganda, let me know if you have another source that would be better to use.
I don't think this is a fair read on the situation at all and is largely based in hindsight.
First of all there's a world of difference between knowing a dangerous new virus exists and needs to be monitored, and knowing that it will certainly spiral out of control immediately if millions of people aren't immediately quarantined. I don't doubt for a second that they knew about the existence of the virus on Jan 7th but I do doubt that they knew exactly how contagious it was and the true extent of damage it would cause.
Secondly I don't think you appreciate how big a step trying to cancel chinese new year would be. Even for a brutal authoritarian dictatorship like China there's only so much control they have over their own people. Military quarantine is an extremely drastic step and I don't think they even attempt it without mountains of undeniable proof that it is required.
I'm certainly willing to acknowledge that China's government could have reacted even better than they did, but they're getting some pretty heavy praise for their reaction overall from experts. Eg:
China’s aggressive measures have slowed the coronavirus. They may not work in other countries