Institutionalizing Reincarnation

China has decided that it is going to regulate reincarnation. It seems the Dalai Lama (who hasn't done the Chinese any favors by shutting up on how they are destroying the land of Tibet) has stated he won't be reincarnated in Tibet as long as the Chinese are in Tibet.

Ummm...so by doing this, doesn't the Chinese government legitimize religion, the afterlife, Buddist philosophy, etc.?