The reality is Bitcoin is stateless so China can't exert influence on it. Scares them, it does. Yes.
China could buy up 90% of all bitcoins, creating an artificial scarcity. It would be a seller's market without anybody knowing why. Prices would soar. Idiots would be going crazy to buy them.
When it reaches $10,000 (or whatever) they could dump their coins on the market, making a handsome profit for themselves and ruining everybody else's day. Bitcoin would probably collapse as a result, allowing them to buy back their 90% stake at firesale prices. Rinse, repeat.
It's not just governments who could do this. Bitcoin is still small enough for any number of cartels to do it. I expect they're eying it up right now. They might even be the reason it's at $1000 today.