It isn't exactly the same, but try running a company outside the purview of the government in the US and see how far that goes. Probably not more than a payroll tax cycle before you start to run afoul of someone.
There is a lot of patriotism in China, and the government is Communist. Chinese citizens don't split the baby on that.
The lesson here for anyone surprised by this is that EVERY company in China would do the same, or they won't last long. Does that change how you interact with Chinese entities?