The Company Law does not explicitly prohibit subsidiaries from providing guarantees for the parent company, so subsidiaries can provide guarantees for the parent company after fulfilling the corresponding resolution procedures stipulated by law. According to article 16 1 of the Company Law, it must be resolved by the shareholders' meeting or the shareholders' general meeting. As you said, in this case, the wholly-owned subsidiary is the guarantor. According to the third paragraph of article 16, the controlling shareholder must abstain, so it is impossible to form a resolution, so it is actually impossible to provide guarantee. At the same time, according to Article 2 of the Notice of CSRC and SASAC on Regulating the Capital Exchange between Listed Companies and Related Parties and External Guarantee of Listed Companies, if the subsidiary is a listed company, the guarantee is prohibited, that is, the listed company shall not provide guarantee for the controlling shareholder. In reality, mutual guarantee between parent and subsidiary companies is still common, but for creditors, related risks still exist.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.