Bitcoin technology (blockchain) is indeed needed, so the Chinese government is planning to make their currency using the blockchain, and this is one way to block bitcoin and make changes to their transaction systems.
Which shows lack of knowledge. When goverment doing "blockchain" and have control over it, its not blockchain, its database which is used since at least 30-40 years.
No single entity can do crypto currency, many tried before bitcoin and everyone failed. There is reason to that.
Only Bitcoin succeed when everyone else failed.
I think they still want full access to this technology, as far as I know bitcoin has succeeded in developing this technology and when a government says something like that it will look ridiculous, they say it and don't see the actual conditions at the moment