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Notes -
In addition to the primary role of population control purposes (it's easier to monitor foreign activities by domestic individuals if more stay domestic and fewer go abroad), it's also a (small) part of the post-2010s Chinese capital control policy.
Back in the mid-2010s there was a major surge in capital outflows when China announced a surprise devaluation.. Because the devaluation wiped out the value of the Chinese-held savings, as such devaluations do, it prompted a major exodus of Chinese privately-held wealth as people wanted to get it outside into 'safer' investments less subject to devaluation (or, in the Chinese property market's case, crash).
There are indicators there is currently an... I don't want to say identical, but analogous, outflow. Rather than devaluation, however, this is being driven more by market uncertainty of the Chinese in the domestic economic prospects which- while already heavily dependent on state-led investment for growth- is also dealing with things like, say, the Trump trade war policies, which became more and more credible as last year went on.
Passport control is a (small) part of limiting private savings going abroad, rather than staying inside China. Chinese citizens have relatively limited ability to legally move major sums of money out of the country. For various reasons, it's easier to do so if they are able to go outside of China more easily. Withholding passports is how you can limit things like citizens carrying hard drives of crypto-currency bought inside of China to cash out outside of China.
This isn't the sort of capital control countries boast about, but it is part of why China's foreign investment action plan plan for facilitating foreign investment includes one-way movement improvements under point 19, Facilitate the movement of personnel. The goal is to facilitate the movement of people with money into China, not out.
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