It's not just negative news from Chinese government, negative news from anywhere including the US can affect the price and this doesn't happen only to Bitcoin only. I happens to other tradable assets too such as stocks, commodities etc. Markets always react to news as traders look to make some quick profits or look for opportunities of buying dips.
Have you noticed that such bad new about bans become rampant only when it's a bull run and never in a bear market?
Now you know why.
Right. Not just China, any negative news can affect the volatility of Bitcoin. However, China is where the most negative news comes out, and it also has a lot of impact on bitcoin. And of course, China is the most populous place in the world, with the most investors, crypto projects and Bitcoin miners. So China can always have a big influence on Bitcoin and the crypto market!