Why should China be managed by districts? For example, Xujiahui District in Shanghai.

This is an administrative structure since ancient times and is not exclusive to any country or system. The wisdom of the ancients has clearly understood that the management ability of a person or an institution is limited. It is of course unrealistic for the emperor to directly manage the people of the whole country, which gave birth to small administrative regions such as States, provinces and cities. Similarly, further down is the district and county level. Further down are streets or villages.