You are right that if you stop testing then the R0 goes back up. That is why you test everyone every time there is a new breakout. If keep a breakout from spreading among the community, then the R0 goes to 0. The R0 is probably not very high to begin with in cases where there is a breakout in China because they do very strict lock downs, wear masks, and are in general very careful.

It also helps that anyone visiting China has to undergo 2 weeks of quarantine before going among the community. If you have the disease under control in your community the only threat is outsiders.

Also, you are right that the positive rate needs to be somewhat low for pooled testing to be effective, so that's why you do it at new breakouts before there has been much spread. I had heard that there are, at least in the US, issues with proper swab and reagent shortages, or at least there were delays due to supply chain issues. I thought there were issues with a lack of PCR machines could be wrong. I don't know what the case is in China, though it is clear that pooling is what they did to test people with lower risk of infection (it's in the last article linked in tristanj's comment).