that is mostly FUD in my opinion. and China government has never shown any interest against bitcoin in the past 8 years and if you believe China is holding majority if bitcoins in circulation that means they are rich and rich people will do anything to change the government opinion if they decide to do anything against bitcoin even if it means buying the government.
The question is not wether China's government banning bitcoin is FUD or isn't but: what would happen if China went for a full blown ban. Let's just imagine that happens... what would happen to the price? My immediate intuition tells me it would insta dump. So how do we protect from that potential situation? I think it may eventually happen. Sure, China can put KYC laws on exchanges, but what will happen once we have decentralized exchanges that work thanks to the lightning network? most people will use those to avoid paying any taxes, or maybe not since I cant help of ways to move relevant amount of moneys off the banking system without gov noticing.... thought call.