1. The Chinese government is a paranoid control freak, so to speak. Officials are scared to death that cryptocurrency may become a new mainstream way of transferring money.
Transfering digital tokens is a great way to avoid any kind of tax and high external fees, this is not something Chinese government will allow.
2. They don't want to ban cryptocurrency per se. They want to find a way to curb it. That is why they killed ICO and yuan to BTC trading.
3. China didn't ban crypto to crypto trading - and as soon as they will realize that it is far better to keep cryptocurrency around (after crypto services will be taxed) yuan to BTC trading will be back.