I don't work in China, but if my own experience in corporations is at all representative of CN businesses, basic greed and ignorance is a good explanation for much of this. There's no giant conspiracy with backup plans nested within backup plans. Leadership is simply a bit out of touch with the general audience and got blindsided by the poor reception.
I remember this one project where I told the guy in charge that a proposed change would probably not be welcomed by our customers. He told me not to worry about it. Sure enough, a few months later we're drowning in complaints, and slowly reverse course and give concessions to the people affected. Change still went through, but not without big modifications.
There's this idea that corporations of thousands of people and millions of dollars can't possibly do something stupid, but that is unfortunately not the case. Corporations are just collections of people, and the guys on top steer the whole thing. If their assumptions are wrong, the whole company suffers.
All that being said, I don't think is the end of the game or anything like that. It remains to be seen how they react to this. In all likelihood the system will remain, but with less emphasis than before and they'll probably scale future plans accordingly. (i.e. what they already said in their response.)