I hope it is for a good cause and the intention of China government is genuine and transparent for checking by the Chinese bitcoin community that might be the first that been targeted on this policy. Regulation is necessary when the one implemented it doesn't think about self interest or corruption. We just hope for the best of both parties.
I guess it is. With the exchanges without formal licenses being closed, a new legit one will be opened. This will make the image of Bitcoin clean and may set to the world that Bitcoin can be use and transasct without any trace of illegal activities if the government just act accordingly to get rid of illegal people and transaction in Bitcoins. Though it might have been used to mislead weak hands into selling their coins. Oh well sad for those who sold all their coins though I guess they deserved it.
I hope your guess is right. I don't know much on how central government on china is running especially about monopoly of business. If all be given fair licensed and not be chosen by the government officials for a personal reason. Regulating exchanges at that rate maybe good to all. But if it is the other way around, transaction fees will be much higher than a decentralized concept where compitetion is available.