If they have their coin based on the population there then its no different than what is currently obtained with their fiat currency because it will only be used within their jurisdiction and the moment they allow it to be traded to BTC and vice versa, it then means that they are back from where they started from.

China is a trailblazer country that I believe rather than going that way, they would prefer to expand their control towards that direction and if that won't work, they would rather ban everything all together.