Hardware is being manufactured in China due to the lower costs, but that doesn't mean every manufacturer of mining gear is in Chinese hands. Does it give them some sort of an advantage? Perhaps, but Chinese influence in Bitcoin is diminishing to eventually such a level, that other than their cost-friendly-climate, there is not much that gives them any sort of significance.
Yes, it gives them advantages since hardware is the primary needs in bitcoin mining, but is doesn't mean that they can control the bitcoin network just because of this. Miners are the one who are charging the fees on every transaction that are processing in the bitcoin blocks, so they are the one who have the most amount of the bitcoin compare to the normal bitcoin users.
So, if they DUMP their bitcoin, the bitcoins price will be affected by this situation, causing the whole market price to fluctuate in a lower price, that is why, most of us are thinking that China is controlling bitcoin by manipulating its price, but the truth is this is all that they can do to bitcoin, to manipulate its price but never to take control of the whole bitcoin network.