I actually agree, maybe we should explore ways to isolate risk groups. I also share your scepticism about Chinese statistics.
However, there are two flaws in your argument, with all due respect.
First, you reject the right of any government to restrict movement of its citizens, in principle. How can you then order members of the risk group to self- isolate?
Second, you did not address the problem of hospitalization. Your ratio of 0.6% is a mortality rate. A free movement of the remaining 99.4% of the population, as you suggest, would still cause the collapse of any health system.