I believe what China understands is that it is in the fight of its life against decadence. It correctly sees decadence as the product of liberalism, something that afflicts dying societies as they transition to some new illiberal regime.

In that new, illiberal regime, the CCP will (most likely) not be in charge, and Chinese society as a whole may not survive as a united entity.

Now liberalism starts by people who no longer want to be bound by the old morality, which they deem as intrusive or blocking them from realizing their happiness. In the beginning, they just want to be left alone to ignore the old morality. But then the liberalism turns into decadence -- they mock the old morality with increasing intensity. Then the mocking becomes stronger until the old morality is declared evil. As all of this is happening, people turn to hedonism.

But the old morality was keeping the society together, and when it is gone, the society collapses, to be replaced by some new illiberal regime that enforces something else. That is basically the US right now -- we are undergoing social collapse, and everyone except Americans see the collapse happening.

But the west had a strong strain of Christianity that withstood liberalism for a good 200-300 years before decadence really took hold in the lives of ordinary people. That coexistence with liberalism created enormous economic growth. China doesn't have 200 years because as a socialist revolutionary government, they already swept away a lot of the old accumulated cultural capital that allowed Chinese civilization to continue, and they didn't really have anything convincing to replace it with. Then they allowed liberalism in order to also benefit from economic growth. Now, they see the decadence starting to take root, and are really worried.

Really all they have to keep the society together is national pride and a quest for making money.

They have tried to do things like revive an interest in Confucius, for example, but they can't seriously be trying to resurrect that old civilization. So China's morality is extremely weak, and isn't in a position to hold out as long as the west did against decadence, so they are really in a lot of trouble.

Thus China is fighting like mad -- e.g banning effeminate men on TV, trying to ban excess consumption and put a lid on consumer culture, maintaing strict control of media to ensure patriotic content and limit ironic/satiric portrayals of cherished values, etc.

It does not want to allow the cultural shift that happened in the 60s in the west to happen in China. Basically, China is fighting the kulturkampf that Bismark fought in Germany.

And just like that cultural war, China is trying to strengthen the social safety net to make sure that everyone has a place in their society, in order to inculcate loyalty to the system and extinguish the "outerclass" consisting of those who are enemies of the current morality. The carrot is a stronger safety net, the stick is pretty strong, too -- public figures are being dissappeared not because they openly opposed CCP rule, but because they embody decadent values.

Note that this is a chronic problem for communist regimes or any regime that takes hold after a leftist revolt, and the USSR had the same problem. Once you destroy a thousand years of what kept the society together, what new glue can you use to keep the society together? It's something Marx discounted because of his robotic materialism -- to him man was a stomach with legs -- it was all a battle about material means, and burning down all the churches and rewriting history a small price to pay in order win the battle of economic distribution. Until you are actually in charge of the society and realize that all those churches were really important, and you can't just ginny up a fake state pseudo-religion that actually has the strength of Christianity to keep the society together. By not taking religion seriously, they just assumed they could replace it, and it was only too late that they realized that this isn't something you can just cook up when needed. The state insta-morality is paper thin. Remember the USSR fell apart not because it was bankrupt, but because the elite didn't believe in it anymore. It became the butt of jokes. People were tired of it and mocked it. Whereas Christianity kept society together for over 1000 years, communism was an effective glue for about 40.

So China is scrambling to avoid that fate, trying to defend the paper-thin "socialist core values" that it sees as the glue holding society together. Of course almost no one believes in socialist core values, not in a way anyone is loyal to, so what Xi ends up doing in practice is arresting boy bands.

Now, with this perspective in mind, if you re-read the statement, it should make a lot more sense.