This is not an entirely bad report on what is happening in China. The Main focus is that the " Chinese authorities have taken note of the move toward bitcoin, and they are trying to throw cold water on the coin in order to tamp down capital outflows and help the yuan. " So they shine the light on Bitcoin exchanges to scare people, in the hope that less capital will flow out of the country. This will not stop Bitcoin or it's users from finding ways to buy/sell and trade bitcoins.
If this was done before Mt Gox happened, then irregularities would have been detected in advance and we might not have had the Mt Gox incident. The regulated exchanges must function as "safe" area for people to trade bitcoins and if they fail in doing this, we will suffer the same fate as we did with the aftermath of Mt Gox. The government have a duty to protect the consumer from questionable practices or services.
It is exactly what is happening. China will do everything to maintain its economic status quo, they are known for devaluating yuan and using predatory dumping strategy (which harm their companies)
just to be able to remain number 1 exporter of goods in the world. It is clear that they can't stop bitcoin trading - but they effectively can put people off, hindering bitcoin acceptance.
