That said, if the technology delivers on the potential the gov't claims, I think they will have to relax the laws or make it flexible enough such that people and the government reach an understanding in expectations while affording people the maximum liberty while providing a base-line of expected behavior.
Obviously, without oversight from the people, this has the potential to turn into a monster.
China is a huge, huge country, historically it's been difficult for the central government to exercise its control all over its territory. This would be the realization of that historical desire.