There are plenty of people of Chinese ancestry (or Asian ancestry in general) who have no family (within a few generations), friends, or relations to China, and never stepped foot there.
If the objection is to naturalized US citizens from China who have still have ties to China (I am one of those people), fair enough, but then there are three problems:
1. You should be filtering for foreign connections in general, not for ethnicity. That test already happens in the process of getting security clearance.
2. You can leverage people in plenty of other ways that do not involve threatening friends or relatives. Both the US and China have teams in government agencies that do that for a living.
3. Oh man this is a huge can of worms when it comes to civil rights, equality, and constitutional issues in general.
That makes for a not-very-accurate filter that is ethically suspect that is also not hard to bypass for the seemingly valuable intel underneath. Seems like bad ROI.
Perhaps I really am naive as you say, but on the second order of analysis it seems to me like an ineffective policy if it were actually a policy.