Not a contradiction at all. Pedestrians and traffic don’t mix well, even under more favorable circumstances than here. A street can be a nice place to shop, have a relaxing walk, and eat in the open air; or it can move vehicular traffic. It can’t do both well.
Traffic density will not be materially affected by closing a few pedestrian areas. (Right now they call Hsimending a “pedestrian area” but in fact allow some vehicles to drive through. Typical.) If it ever got to that point (like, after Jesus comes back), then we might be able to move away from car- and motorcycle-centered transportation system altogether. Really, the main effect will be the people living in that area who have cars. But then, they will also be the ones benefitting most from more people coming to shop there. So it all balances out.