We cannot remove the fact that China had the major contribution regards with Bitcoin mining and I admit as well that they have big impact in this industry but I don't think they have the full control on Bitcoin. Perhaps you we are all aware that no one can manipulate Bitcoin because if it does then we cannot say it as decentralized.
It is true China is one of the leading countries when it comes to bitcoin mining for once it mined almost 3/4 of the bitcoin in a month and even affected the stability of bitcoin's price. The cause of this centralized mining in China is the cheap electricity rates but these past few months China are being rude to their miners attacking then about the e-waste that bitcoin mining produced.
As far as I know, Bitcoin is not banned in the said country but rather the exchanges related with crypto. Bitcoin mining is still widely processed in China so we cannot totally say that it is prohibited. They may use their own digital currency but it won't overthrow Bitcoin in any other way.
Actually they are not against bitcoin, in fact they are handling it a good way but there are just exchanges whose being illegal that involves in various scams and fraud in the country so China decided to take it down. I guess they are initiating these matters to fully clean their country and start with a their own blockchain and digital currency.