You've hit the nail on the head. But I think there are two separate issues at play here. The first issue is the re-writing of the social contract that can only be done by implementing mass surveillance. This approach is arguably justifiable and gives the government more control to optimize how things work. The second issue is having one party government where there is not opposition. To me this approach is definitely dangerous long term. Complete tyranny is fantastic when you have a great dictator, however there's just no evidence that this model is sustainable. If China gets too crazy, the best and brightest will want to leave the country. It's definitely a crazy and bold experiment and it's definitely working in the short term.