There is possibility that Chinese Goverment would nationalize crypto mining operations, but I don't think they are planning to do so. Also those mining farms are owned by people with connections to goverment, so most probably they have all permissions for their business.
So what will happen? Nothing!
Because they know that if they do any wrong movement (51% attack for example) they actually hurt their own investment.
Well, if they hashpower to run 51% attack, they could do for double spending bitcoins after all. I don't know if it is a real threat tho. But overall it's a bad thing for decentralization that China has the majority of mining power.