2 stroke motor running badly

first thing I'd check is the head gasket - all new motors need tightening there sometimes, but newest 40mm stroke motors seem to need it much more often when new

In my experience, these china girls need a lot of tuning. My advise (and it's probably contrary to some of the guys here) would be to get rid of that carb and get an R/T speed carb. Besides re-jetting, they basically don't need tuned. Check your intake and exhaust gaskets, these are common compression leak areas (sounds like a compression leak to me) but also check your base gasket too. If you can keep it running while idle, try looking around to see if you can see where fuel might be bubbling out while it's running, higher RPMs usually make it more noticeable. There are a number of places or things it could be. The more you work on these, the more you learn about them.

If you are losing power you are probably losing compression. Some of those stock heads can become warped after several hot and cold cycles. Check for air leaks around the head. Start it up and use your hand to see if you can feel any air shooting out from around the head gasket. Also, check for air leaks at the carb/intake connection.