After the revival of Spiritual Energy, the Taoist sects from The Kingdom of Jushi rose, and other religions declined, especially Buddhism which closed its doors with only a few monks left. The Four Hundred and Eighty Temples of the Southern Dynasties have long vanished into mist and rain.
Nowadays, everyone believes in the Taoist ways, or to be more precise, in cultivation. But faith is one thing; on a national level, it's impossible to completely ban the spreading of other religions.
Throwing the issue onto the international stage, no country would do such a thing... oh, except for the divine sects.
So the policy still upholds the religious freedom of the past, but on a societal level, it has become extremely difficult for other religions to operate. Not because the Taoist sects deliberately suppress them, but simply because the common people do not support them, as they are not deemed effective.