They’ve already done that to a large degree which is why VW and others are already feeling down:
Beijing and other big cities use a lottery system to limit car registrations. The majority of lottery tickets are already for BEVs and hybrids.
Exhaust emissions requirements already go beyond Euro 7, making it impossible to sell most built-for-EU cars in China.
There is some kind of NEV (New Energy Vehicle) incentive and afaik, that only goes to Chinese cars. I’m not sure whether it’s enough for the car to be built in China or whether it needs to be from a Chinese-owned brand as well.
They’ve already done that to a large degree which is why VW and others are already feeling down:
Given that you cannot build cars in China without having to go into a joint venture with a Chinese company that probably won’t matter much to them… :)