What good would bitcoin be if it were being manipulated by the Chinese government? I think I would sell off at that point. To me that is a fatal flaw. It completely undermines bitcoins strengths.
Heh. Only the means turn you away, you racist. You don't like those filthy Chinese touching your coins? I kid, I kid.
The fact is if China tackles the market, so will many other governments. If the incentive exists for the largest sovereign government to manipulate the currency, it won't be alone.
The rational way to see this is only as mere demand. Governments are just another Bitcoin customer. They just have guns to extort more funds. Dangerous in ways but have faith that competition will keep them in check: China doesn't own the world.
Nobody is conquering the Bitcoin network. It shall remain sovereign as always because everybody is going to want to have a stake in it.
Your choice in Bitcoin suppliers and supporters shall remain and your coins will only be found more valuable. The fantasy we are portraying here can only be good fortune.