The reason for that is simple. The Chinese government doesn't want its citizens to be putting their money into something which it can't control. By using Bitcoin Chinese people and companies can avoid paying taxes and can get their money out of the country pretty easily.
It's not just about people in China who are buying Bitcoins, the Chinese government is reducing the number of miners in the country too. The way their doing this is not just by putting up laws and through their central bank. The government is actually reducing the amount of energy available to miners. The reason that China was such a suitable place for miners was because of the low energy costs. Many large mining setups in China have started moving to other countries.