And the article says, that won't be legal anymore. And it would be enforced. No more real encryption in china anymore.
(And: Seriously, HN, recaptcha on the login dialog? Have you any idea how hard that is on tor users?)
The communist party is embedded and makes money from the industry. They do not want to see it blow up.
Alibaba, Tencent, Baidu, JD, all would just die.
I think the aim, if I understand it as it is not very clear overall, is rather than government agencies may access the company's infrastructure (VPNs are irrelevant).
I think the law is closer to "government agencies may access any of the company's information".
The worry is that this may be used to access companies' data.
This is how they contain the damage. Plus the party controls the (enormous) population even more closely during the rapid contraction.