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THIS is a fantastic question and, to me, is evidence that China is massively under-reporting the numbers here.

We know almost nothing about the denominator. I simply take the Chinese numbers for granted at this point, but the number of cases could be a lot higher.

It's been a while, but we can extrapolate a (probably) somewhat more accurate number using the tencent leaked data from a couple weeks ago. I forget the exact numbers, but back then a major Chinese site posted numbers that were way different from the official ones for a very short time, and seemed much more like the real numbers based on China's locking down cities and other reactions to the virus. China's massive population has about 20M deaths per day (7MM per year), so why would they quarantine a major industrial city over (at the time) a couple hundred deaths (officially)?

Those numbers had half the number of recoveries, and seventy times the number of dead. Using that on the current official Chinese numbers, we get China to have around 186M deaths, and just under 14M recoveries. Giving us a possible fatality rate of 93%. Even if we don't halve the recoveries, we're still at 87% mortality.

China's massive population has about 20M deaths per day (7MM per year)

China has 7.3 deaths per 1000 or 10.5 million per year. Like most temperate countries, winter deaths are at least 10% higher than summer, probably more for China. That gives us about 30k deaths per day in winter months. Your numbers are off, but that doesn't matter since your contention is that they would not quarantine a major industrial city over a few hundred deaths.

I forget the exact numbers, but back then a major Chinese site posted numbers that were way different from the official ones for a very short time, and seemed much more like the real numbers based on China's locking down cities and other reactions to the virus

Speculation based on "leaked" data with no provenance is pointless. They quarantined 60 million people with more than the normal 1300 deaths per winter day because there was an unknown virus filling up hospitals. The fringe news stories talked about 100's of cremations per day in Wuhan. That's normal.

Giving us a possible fatality rate of 93%. Even if we don't halve the recoveries, we're still at 87% mortality.

Drivel. You are using a completely speculative death rate based on an anonymous internet source, and ignoring all the recovery cases that were not hospitalized.