So I contacted Airbnb support about this, and here is the reply I got.
<< I understand your concern however Airbnb does not release travel information to the Chinese government. Airbnb shares the listing information & not the travel information or guest details. >>
<< Airbnb does not force for the registration. It is ideally the host responsibility to get the registration done. >>
The first representative I messaged didn't know the answer and reconnected me with someone else. I am not really sure if the new person gave correct information either since these news articles seem to say the opposite.
http://www.bbc.com/news/business-43578948
https://www.bloomberg.com/news/articles/2018-03-29/airbnb-to-share-information-with-authorities-on-g...
The BBC article really makes it sound like the policy change is to do registration process automatically; however the other articles were a bit more vague. Not to mention that the BBC article directly contradicts Airbnb's reply.
Bottom line is, I still don't have an answer but at least I can share more information. I'll post here again if I learn anything new, but the safe option to avoid breaking the law would be to work with a willing host or book a hostel/hotel.