At some point it becomes a worthy tradeoff to let some people go so that the rest can procreate at reasonable levels. While many people left China for the west when it was at its worst, most stayed. While they weren't the brightest and most qualified, It is their descendants who built the country to what it is today.
Same goes for the gaokao and university thing, what's the point of achieving so many technological accomplishement today if later on most of the population becomes old and stubborn. Look at Japan, it is now mostly inhabited by elders whose stubborness and conservatism might be the biggest contributor to their country's eventual downfall. In the seventies and eighties, they used to lead the world in many technologies including cars, ships, motorcycles, semiconductors, robots, lean manufacturing and others. But now, they still insist on using fax, have barely started phasing out disquettes (LMAO) and their newest computers (as in for the japanese market) look like they're from the 2000s. They also keep electing the same party over and over again, and are extremely averse to any daring policy that might cause radical changes to their existing system. At some point a war will break out (that's certain if you follow history), and they're at a huge risk of getting wiped out.
It is well known that as people grow older, they become more resistant to change and set on their "old" ways. This is extremely dangerous for a civilization's survival, especially when it gets compounded with the fact that they cause younger people to work longer and harder to support them, preventing them from procreating and leading to a vicious cycle. We're already seeing the consequences in Japan and Europe, which are on their way to getting deleted.
To get back to your point, if deploying somewhat radical measures through a carrot and stick approach leads to some bright people leaving and to some college graduates becoming dumber, so be it. As long as the Chinese civilization stays alive, they'll rise once again (assuming they'll fall from grace in the first place). Otherwise, all the hardwork that's been done in the last 70 years will be wasted.