It is probably done to deter foreign agents on the Chinese internet, but truth be told it is more of a hassle for legit overseas posters than anything else.
There is a huge amount of fake news and completely illogical rumour spreading going on on the Chinese internet that defies all rime and reason such that it is almost certainly the result of foreign government sponsored PsycOps programmes.
Remember how there was this massive following of the ‘Jasmine Revolution’ on Chinese social media around the same time as the coloured revolutions of the Arab Spring? So much so that even the US ambassador rocked up to the supposed starting place only to find no one but oblivious Chinese shoppers and undercover Chinese security?
That was almost certainly created and sustained with a botnet or just good old fashioned manpower with a basement full of social engineers all with dozens or even hundreds of invented profiles all posting and re-posting to support each other in the hope of making something go viral and sucking in clueless internet zombies desperate to be the first to find the ‘next big thing’ online so they can brag to their friends and followers.
All of these media tricks didn’t start with the Trump campaign, it was widely used against China, Russia and anyone else certain western governments don’t like for decades as a matter of course. Trump was just the first to dare to use such methods against his own people.
The requirement for registration and verification was primarily introduced to tackle western government agency run social media programmes.
Sure, such government agencies could still obtain valid Chinese phone numbers for registration. But it adds costs, delays and risks to do so to get the thousands of numbers needed to set up an effective botnets.
Overseas Chinese are just collateral damage in this grand game unfortunately.