I am not an expert in the rep business nor do I know what the Chinese governments plans are. But just from a „logical point of view“ I do not see how the government would benefit from a complete shutdown of the rep business.
The question is: who would benefit?
The gen brands, of course. But why should the Chinese government take care of them - they never did in the past when it came to any „copy cat“ issues. Just think about the car industry some years ago when Chinese brands copied the existing manufactures in an very obvious way. The gov did nothing because they wanted to strenghen their own home companies. So why should they give Rolex and Co. a present and erase the rep factories?
Even if the factories and the TDs pay taxes because they operate as serious manufacturing/trading business?
Finally, I think the raids have just been show or a way to collect bribes/higher taxes.
Just my 2 cents and who I am that I could know...