The funny thing is how people fall for the "China has banned bitcoin" thing every time. Anyone who was around in 2014 will be familiar with it - it happened practically every week and the market always tanked before recovering when people came to their senses.
China makes a lot of money mining - they are earning a lot of foreign currency by essentially mining coins and selling them for dollars. As long as they dominate mining they wil never ban bitcoin.
That sums it up very well. And China could not stop it, even if it tried to.
Also as you point out so clearly, the economic stakes are way too high for China.
So basicly it is FUD apparantly to manipulate the market price.
Just another day at the office.