Get the new passport if you can.

I somehow remember that the passport must not expire within 6 months before the consulate can issue you a visa. I could be wrong though.

I think your hu*****and may be able to send his passport directly to the consulate but the consulate may only send it back to an address in usa. Again, call and ask if you want the consulate send it back to China. Remember, you need to provide a prepaid return envolop. You'd better use FedEX or other mail service which can be tracked and more secure and fast.