Many people have speculated that the Chinese crypto ban which comes into force at the end of the month was a prelude to Chinese protectionism.

This is consistent with other bans in China. They banned Facebook, Youtube and Google only to have their own versions. Many think the Chinese are doing the same thing, introducing their own centrally-planned cryptocurrencies behind the Great Firewall of China.

This shows that the Chinese government don't really understand cryptocurrencies or what gives them value if they think they can just make a clone of Bitcoin like they did with Baidu (Google) and for it to be anything like as successful as coins that are decentralised and not restricted by borders.

China will fall way behind with digital currencies, as appears to already be the case, with South Korea unsurprisingly overtaking them on BTC trade volumes. Their largest exchange is now doing more trade than Bitfinex and Bittrex combined.

As for Bitcoin itself...

There's no doubt it took a hit with the loss of China, but the dent isn't even as significant as when we lost one exchange (Mt.Gox) and BTC will go onto climbing new heights when it recovers. It will leave China in its dust and any other country foolish enough to ban it. There will always be countries that allow Bitcoin trading, so trade will simply migrate to them, like it has done for South Korea.