The move, initially beginning with CCTV and Beijing TV, has already seen the removal of leading Korean movie star Kim Heen Sun from local ads.
Even China's national football coach, Bora Milutinovic, the man hailed as leading the nation to its first World Cup finals ever, has not been spared - once the soccer tournament is over, he will be dropped from the current crop of commercials in which he appears.
However, the CAA has described the ban as "improper given the economic liberalisation going on around China, which has been given an added impetus following the country's successful entry into the World Trade Organisation about six months ago.
It also worries that the decision by SARFT will give an unfair advantage to multinational brands and that local companies currently relying on foreign stars for building brands will be dealt a heavy blow.
ZenithMedia China vice-president, Steven Chang agreed, saying, "It will affect quite a number of local advertisers as they rely on the popularity of foreign celebrities to boost their brand image."
MindShare Beijing buying director, Lisa Wei, questioned whether the ban could be enforced.
"What we expect will happen is local clients will begin to use their commercials on other stations after defecting from CCTV. This will cause SARFT to enforce the rule on local television stations, because of the pressure they will get from CCTV.
"Hence, it is possible this rule could affect all of China ... it will be interesting to see how long this rule can be imposed because on the surface, it represents old thinking in a relatively new China."
The industry has also hit out at the lack of notification. A CAA spokesman said: "We didn't receive any official notification , but many advertisers and agencies ask us about the issue. We tried to find details from the State Administration for Industries and Commerce, which is the government department that takes care of the advertising industry.
"They said that it is not their decision to ban foreign celebrities performing in TVC and, therefore, they are not able to issue any notification to advertisers and ad agencies."
Grey Beijing general manager, Josh Li, added the "directive was a typical approach in the way the Government took control of ideological issues.
"Advertising, always, is treated as an important source of influence on social ideology. And the Government's control is not surprising at all."
Zenith's Chang pointed out that this was not the first time the Government had put forward an unclear advertising policy.
"There was no black and white notice to us, only an indication that there will be a limitation on the use of foreign celebrities in the advertising for local brands, Chang said.
