It's not some ancient Chinese tradition, but it does have something to do with Chinese culture. In a culture that values honor as much as the Chinese culture does, the more people attend someone's funeral, the more the dead person is honored.
In order to draw larger crowds to funerals, a few people started organizing funerals that involved a striptease performance! The authorities considered this to be "obscene performances" and arrested 5 people in a rural area for organizing the nudie funerals.
