IMO E.
A - Rallies organised in conjuction with the dissemination of democratic principles which was once prohibited by the Communist Chinese leaders, are - Rallies are not beginning to take shape. WRONG.
B- Rallies organised in conjuction with the dissemination of democratic principles, a practice that Communist chinese leaders once prohibited, is - s-v agreement problem. WRONG.
C- Organising rallies in conjuction with the dissemination of democratic principles, as once prohibited by Communist Chinese, is - Organising rallies is not beginning to take shape. 'as' is redundant. WRONG
D- Communist chinese leaders once prohibited organising rallies in conjuction with the dissemination of democratic principles, but they are - 'they' is ambiguous and can refer to leaders or principles. WRONG
E- Communist Chinese leaders once prohibited organising rallies in conjuction with the dissemination of democratic principles, but such principles are - Use of 'such principles' removes ambiguity and make it clear that priciples are beginning to take shape.