Seems to me a "no dogs that aren't vaccinated against rabies" and "as many vaccinated dogs as you like" would be more helpful.
Absolutely. The article cites a high cost of canine rabies vaccinations in China as part of their rationale for this new policy, but as you say the smart route would be to make whatever changes are necessary in order to lower the cost and pursue the vaccination route (as well as other options, including the culling of feral dogs). This is apparently more than what the Chinese want to do in order to save 3,000 lives every year.