Then they will announce that exchange can pay x fees and submit all data to the central server to obtain a license to reopen, so price recovers - bingo, biggest win ever.
My original assumption was that they intended to license/regulate, the main motivation being fear of capital flight. If they tightly regulate the exchanges and enforce strict KYC laws, then they can more effectively enforce their capital controls vis-a-vis BTC. Or at least they could deter some people from using BTC to violate the capital controls.
But you have to admit... this has taken things further than the "ban" referenced in the OP. All of the major exchanges are literally shutting down. And this new report that they might try to block access to the BTC network within China? Crazy if true.