Re: What is the improper use?
As noted by the first AC above, governments don't like competition.
The Chinese government has obviously cottoned on to the fact that any commercial organisation that collects enough personal data will gain the ability to blackmail engineer officials into compliance, it's a direct threat to their ability to maintain control over the long term*.
By doing this the government can also say it has the populations best interests at heart, part of the strategy to keep everyone content with the status quo.
* long term for the chinese govt. is measured in decades.