1. I think China want to temporarily crash the market so they can collect more BTC (and other coins dirt cheap) before announcing that they are officially adopting. At that point BTC (and other crypto) will sky rocket.
2. They don't want their citizens to trade cryptocurrency and earn (relatively easily) in fear of losing their cheap labor force. They will then try to make it as difficult as possible for it to flourish in their country.
Which is it???
I think its number one because as what I observe and as far as what I've read in my research about the history of bitcoin everytime China will release a negative about Bitcoin it is expected that the price of it will go down and then they keep telling that they will ban bitcoin but still they are using and they still have bitcoin up to till now so its just mean that they are making all the FUD to let people sell their bitcoin because they panic and Chinese people are waiting eveyrtime people dumps.