China is dealing with the problem of capital flight, as a result of attempting to maintain their peg of the yuan to the dollar. As a result, I wouldn't put it past them to do something like this. Eventually, they will have to capitulate and devalue the yuan (again). But, until then, we may see them try numerous things to prevent capital from leaving the country, and these won't be limited to cryptocurrencies.
At the same time, massive bitcoin mining operations in China bring $billions into the economy. So, I have a hard time believing they would go so far as to try and ban cryptocurrencies on the whole.