They do have a problem, plenty of Chinese "companies" are bringing in workers on social visas and putting them in "multiple occupancy dwellings". They have the cooperation of certain agents and immigration officers, who like to make a quick buck and shield them from further Immigration investigation. This also avoids certain costs and levies on workers.

And yet wages in Indonesia are lower than China, so why do that?

Some are illegal tour guides, China now being one of the largest tour groups, and some are certainly involved in organised crime, phishing, boiler rooms etc. A MOD with young Chinese, lots of cables, high power usage etc.

Latest move from Immigration is to make all ITAS and ITAP holders report to the banjar, police and catalan sipil to get confirmation of living address prior to grant or renewal.

More than just the regular bright ideas, maybe. Having your country used by these scum because you are ruled by the feckless and corrupt may grate on some.