I suspect that the only reason for them allowing crypto exchanges to exist in its' cripple form is because they want to retain chip fabrication, bitcoin mining and blockchain technology within China.

Perhaps the next mandate will be to compel Chinese mining companies sell their bitcoins only on Chinese exchanges. This in the mistaken belief that it will keep bitcoin mined in China within China.

Imagine how this message will come across to the rest of the bitcoin community around the world. Suddenly bitcoin inflation rate becomes localised. It is no longer 1800 bitcoins a day as 1400 will be retained within China. We may see a scramble for bitcoins on a country basis. Price will go to the moon as national exchanges try to outbid one another for the available bitcoins.

Will this happen? hmmm