It is easier to use *BSD for something like that. It is smaller, more consistent, you are not forced to release your changes...
They're trying to move away from proprietary software, not create more of it.
The Chinese do have a government-sponsored distro, Red Flag Linux, and at one point the Chinese government ordered Windows 2000 be uninstalled from government computers and replaced by Red Flag Linux, although whether that actually happened, while anyone’s guess, is unlikely.