That mentality existed through the fall of the Iron Curtain. When I lived in Europe in the 80's, a friend of the family worked in military intelligence (an oxymoron, I know). He couldn't give a lot of details, but one of the classic stories he'd tell was about Soviet military training exercises--back in those days, they wouldn't even tell a convoy where they were going. Their standard operational procedure was that only the commander would know, and he'd be in the first vehicle in a convoy. Any time they needed to turn, they'd drop off a soldier at the intersection, and he'd then direct everyone else and get back into the last vehicle of the convoy. This would be repeated over and over until they reached their destination.
Now, when the intelligence guys wanted to find out what was going on, we'd simply ask the guy at the intersection. He, predictably, would say that he couldn't tell them, and they'd reply that of course they knew they weren't allowed to follow the convoy, and that to ensure they didn't, they had to know which way the convoy was going, so they could go a different direction and not get into trouble with their superiors.
With that impeccable logic, the soldier would generally point out where the convoy was headed, allowing the intelligence guys to speed off in that direction...
Enforcing by fiat from several thousand miles away.... geeze I wonder how that's going to look to the Chinese staff.
Having been there, my guess is that it won't be nearly as poorly perceived as you think. The Chinese have had several thousand years to get accustomed to that idea. It's quite ingrained by now.
Actually, the entire premise of using tax law to promote or discourage ANY behavior is patently absurd. It is why our US tax code is completely incomprehensible, and can never be changed. Since we have an exemption for mortgage interest, that effectively gets factored into the price of a house (i.e. you're willing to pay more for the house since you'll be able to deduct the interest--which, for most people, is a very large fraction of your mortgage). Which means if you take that away, housing values instantly drop by about 15%. And once you leave one deduction in place...
In fact, right now is about the only possible time that it could change (since we're already dealing with the effects of a sudden large drop in housing values), but I don't see it happening.
"Mr. Watson, come here, I want you." -- Alexander Graham Bell