Japan has similar laws curbing free speech. It comes down to the east asian concept concept of 'face'.
Japan's defamation/libel laws, similar to this Tesla case China, don't matter if what you said is true. What matters is that you disrespected the 'face' and reputation of those in power.
For example, if a news agency reports on a rapist, or an individual puts up a bad review online: it doesn't matter if it is true. The 'victim' sues you for libel/defamation for speaking the truth because you didn't "give them face" and you hurt their public reputation. Expect the police to come knocking and ask you to remove your truthful reviews, or you risk jail time or civil penalties.
Edit:
The judicial system in China is fucked up beyond repair.
I suspect the judicial system here is working exactly as intended. Its the laws in Japan/China that are fucked when it comes to free speech vs protecting the 'face' of those in power.
Edit 2: I dug up some China specific info: "In Understanding and Application of the 1993 Answers, the SPC [Supreme People's Court] clarified that truth was NOT a defense to defamation. If a work insults and damages a person’s reputation, it is defamatory even if true."
I'm having trouble finding more info about the specifics of the ruling in the Tesla case (AP, CBS, English media don't provide any info), but I'd bet my dollarydoos that the ruling relates to the Chinese civil code concerning the rights of 'reputation' and 'honor' of Tesla being infringed in this instance. The AP article misses a lot of this nuance and detail, which is unfortunate. Something like The Atlantic or the Economist, Foreign Affairs (or NYT 20 years ago) with long form articles and investigative journalism from the days of old might have provided this detail, but these days BBC, CNN, et al care more about click-thru rates so we don't get the full picture.