Then that's where we might be underestimating the fact that the Bitcoin network/protocol is composed of people. I believe if there was that direct threat from the Chinese government, a POW change is in the discussion.
You're right, but i'm sure you know remember how bad was SegWit discussion was. Multiple hard-fork (with different PoW algorithm) might happen, price crash is inevitable and Bitcoin's security will be questioned if such scenario happened.