It fixes many problems, if you're an authoritarian regime. The usage and flow of digital currency can be controlled and monitored. It could be tied to their social credit score for instance, and it'll be used with centralised and regime controlled applications, in ways the regime allows you for. They'll probably ban cash completely at some point.
In China's battle against cryptocurrencies/tokens/etc and bitcoin the idea is to remove notions of decentralisation and open systems. The concepts don't fit with the centralised regime.
Blockchains and distributed ledgers/systems will power web3 and many other fields of business (China has their own "internet" and government built systems, so they don't need to care). Even on Slashdot there are many who basically parrot Chinese state propaganda in their outdated and naive critic of these technologies.
Countering China is best done by opposing centralisation and closed systems, and embracing these innovative technologies. Sure there are problems, but they can be solved.