Analysis of China's change of policy and the effect on Bitcoin prices

[contactluis]

DISCLOSURE: I'm a retired financial analyst and I have a lot of experience on doing qualitative analysis (I know this doesn’t mean anything when dealing with Bitcoins). I've been long on Bitcoin since February of this year and I am a true believer as to the massive economic and social impact that Bitcoin will have upon the world in the future. With that being said, I do believe in protecting my gains, especially when I believe the #1 exchange (BTC China) in terms of volume is probably going to be shut down after January 31, 2014.

VOLUME: From August 22nd through December 19th (120 days), 3.9 million Bitcoins, 15.1 billion Yuan (approximately $2.29 billion) were traded on BTC-China. For the same period, 3.2 million Bitcoins ($1.4 billion) were traded on Mt. Gox (U.S. currency only) and 2.7 million Bitcoins ($1.2 billion) were traded on BitStamp (U.S. currency only).  At a Stanford Seminar, Bobby C. Lee disclosed the result of a survey that BTC China conducted to their Chinese costumers only. While disclosing that it was not accurate (a few receive an iPad for participating), the results were very interesting. Over 90% of their customers who participated in the survey held at least a university degree compared to the national average of 27%. Next they asked why they are buying Bitcoin. Five percent to purchase goods, 19% for novelty, 34% for short-term speculation and 41% for long-term investment.  Assuming that the survey was a somewhat accurate representation of Chinese users, approximately 1.6 million (3.9 million X 41%) Bitcoins were purchased for long-term investment. This 1.6 million Bitcoins that were purchased and held for the long term is a very conservative estimate considering that: a) it doesn't even count the number of Bitcoins that were mined in China; b) it is only 13% of the total number of Bitcoins in circulation (12.1 million) allocated to the 2nd largest market of Bitcoins.

BTC China: On December 5th the government of China banned financial institutions from having direct dealings with Bitcoins. I thought that the global market over reacted to a positive directive (regulation = legitimacy). Bitcoin's price dropped 43.7% from $1,237 at the opening of the trading day to the closing price of $696 on December 7th.  Then it went up 48.35% to $1,034 by the close on December 10th. On December 16th, the Chinese government, using their agent, People's Bank of China (PBOC), convened a meeting with third party channels demanding the end to custodian and trading services. With this news the price of Bitcoin dropped by 41.2% from $920 at the opening of the trading day to the closing price of $541 on December 18th. Speaking for myself, I didn't realize the importance of the December 16th meeting until December 18th when BTC China announced through their website that, as of now, it would not be able to accept new deposits into the exchange. Equally important, you won't be able to get your money (Yuan) off the exchange AFTER January 31, 2014. While Bobby C. Lee, CEO of BTC China, is not giving up yet, I personally think that the exchange is finished. I made the mistake of not seeing the writing on the wall on December 16th, partially because I'm ignorant of Chinese culture and partially because I wanted to believe that such an important market for Bitcoin's past and future growth could not end. My research on the internet has led me to conclude that the Chinese government has thought about the implications of the use of Bitcoins to evade their capital controls and has ended the Bitcoin experiment in China .

Mt. Gox order book depth currently has 108,000 Bitcoins to purchase before it hits the $100 mark. BTC China’s order book depth is only 20,000 Bitcoins until it goes to zero. That’s not much considering the average daily volume was 58,000 on BTC China for November.  From December 18th to December 26th, 227k, 172k and 332k Bitcoins were traded on BTC China, Mt. Gox and BitStamp, respectively. Obviously not every trade was from Chinese investors trying to dispose of their positions, so the amount of Bitcoins that need to be divested is still quite large. So I’m going to guess that 100K Bitcoins have been divested by Chinese investors so far which leave at least 1.5 million Bitcoins outstanding.

SCENARIOS:  So far, I can only think of only 3 options that the Chinese have:  a) hold them for the long-term and eventually trade them in gray markets (investment if Bitcoins are not yet illegal in China);  b) sell them in foreign exchanges for a premium; or, c) wait and see (if the Chinese government is really against Bitcoin or if BTC China is able to get a third party vendor to reinstate deposits and withdraws). If I missed any other viable scenario, please post it. No one option is what they are all going to do in the upcoming month, but I want to get a felling for what the majority of Chinese Bitcoin investors are thinking.

We know that a considerate amount of Chinese Bitcoin investors are male, under 40, and very well educated.

I need insight if they believe in Bitcoins enough to keep them for the long-term and possibly go against the wishes of their government.  If most Chinese investors believe in the very profitable future of Bitcoins, then, I believe, the effect on the price of Bitcoin will not suffer too much by January 31st.

I’m of the opinion that not too many Bitcoins have been sold in foreign exchanges (yet), but I have to believe that a +20% gain if sold on Mt. Gox instead on BTC China (like the price difference was of December 19th) will attract some Chinese investors.  About 8% difference in price between the two exchanges during the last 3 days is not enough to warrant an exchange between countries. I want to get some insight if these Chinese investors would travel to Japan or Europe to get their earnings and how hard it would be for them to exchange the U.S. Dollar or Euro for Yuan.  I don’t know what alternatives Hong Kong would provide, so if you have an idea, please provide.

I’m nervous that Chinese Bitcoin investors have a wait and see approach. Any news, either coming from the Chinese government, BTC China or Huobi, I believe, will cause significant change to the price. I’m concerned that Huobi, the current lead exchange in the world in terms of volume, is defying the Chinese government. I want to know if my concerned is warranted and what the Chinese government will do about it. If the Chinese government raids the offices of Huobi, like India’s Enforcement Directoratendia has done with buysellbit.co.in, there would be a huge crash on Bitcoins price. On the other hand, Chinese Bitcoin investors have more than a month to divest their Bitcoins. I believe the international Bitcoin market could buy the 1 million Bitcoins (500,000 stay in China for the long-term) without hurting Bitcoin’s price due to the immense attention that Bitcoin has been getting the last 2 months.

QUESTION:  Obviously the number 1 question is what Chinese investors are going to do with their Bitcoins. I'm asking the Bitcoin community for their intelligent input. What I really want are replies from people who have experience of living in China, know their culture or better yet, know people in China who are or were invested in Bitcoins. If someone can translate the Chinese forums to see what they are thinking that would be great too.

I don't want your emotional charged opinions to sell or buy, what the price you think it will be in a month, accusations of being a bear, etc. For the most part, we are all long on Bitcoin and know that its meme is the honey badger for a reason. China will not be the end of Bitcoin, but possibly a huge bump on the road. Please don’t respond to brainless replies, it gets us off the point. The point is to listen so we can make an educated assessment of what Bitcoin’s price is going to do in January.

[1715143724]

1715143724

[geri]

Thanks for the analysis. I would expect the kind of investors you are mentioning are travelling on a regular basis, or have plans to travel in upcoming years.

If they believe in Bitcoin itself, they will hold on to it for long term. This is the 41% you're mentioning. Regardless of Chinese gov., they will be able to exchange their coins abroad for US dollars or EUR if they need to.

[2017orso]

Can't help but assume more then 50%, possibly much more, will be holding onto their coins.  Considering the demographic and initial reasons for purchasing, as long as it is legal to hold onto their coins, they will do so, as they should also understand Chinas current stance is not shared by the rest of the world.

In the off chance that China does one day simply try to ban bitcoin ownership, citizens will still be able to hold them on a foreign exchange, or sell them there and recoup the funds.  The practicalities of an actual ban on bitcoins though would be complex and the whole situation would just be absurd.  It's extremely unlikely anyhow.

Further, if demand in China remains, which it likely will especially amongst the sample demographic, and assuming personal bitcoin trading is allowed, citizens will be holding a rare asset.

There are many reasons to hold onto their coins, and significant malleability in the worst case scenario, such that rational investors and rational speculators will have many incentives to hold, something many of them were going to do anyway.

In saying that, IF there is a concentrated sell-off on btcchina (if = assuming the coins that are going to be sold are not being sold sporadically and without bottleneck) then sure rates on other exchanges may follow for a short period.  Thea mount of fiat sitting on exchanges world-wide though, and the influx of new fiat expected this year, I think will more then make-up for the potential short-term supply infusion.

[kdrop22]

The exchanges in China, have instituted some workarounds like coupon codes or using the owners bank account to get funds into the exchanges. However, how long this will remain acceptable to the PBOC of China, remains to be seen.
It is not really clear as to what the PBOC in China wants. Do they want to stop all funds transfer to exchanges or they just want to ban third party transfers (the chinese equivalent of paypal, dwolla etc...).

[skivrmt]

Great analysis.  China is one of my bigger concerns for XBT in the long run also.  I have a feeling China will continue to put in measures to ban, block, discourage any investment in XBT, or any other currency, from Chinese citizens.  They are higher protective the Yuan in so many factors.  They view XBT as a way Chinese citizens can sell yuan, buy XBT, and change into another currency.

Now how many will hold versus sell?  It's anyone's guess of course.  As one poster mentioned, most of the holders are well educated individuals.  Most of them know that so far China has not banned owning per say XBT, just buying them.  But essentially thats banning them.  Think of black Friday in online poker for US ~5 years ago.  US didn't ban online poker per say, they just banned people from transferring money to and from the poker sites.  People of course still played poker, sites developed work arounds, but mainstream players dropped out and volume dropped drastically.  I think we'll see the same in China.  Some will hold, some will buy with work arounds, but the mainstream is out of play.

[geri]

I don't think Chinese gov is against Bitcoin. I think they're just being careful. Bitcoin was featured in Chinese TV before and that's not an accident. I think they're just trying to figure out how to best utilize Bitcoin for their purposes (gaining power over US).

Until they figure that out, they will control it heavily so it doesn't get out of control from their perspective.

[cr1776]

I like the analysis.  I think it is only a matter of time before Taiwan wants to stick it to China after China's moves the last few weeks. :-)

Surprised Japan doesn't too after the sparing over the islands etc.

[Trading]

The problem isn't about only what the chineses are going to do with their bitcoins if the chinese exchanges end up closed on the 31th of January, but also what will speculators do if we receive news that the close is really unavoidable. Taking in account past reactions, most will sell.

[DieJohnny]

Any news, either coming from the Chinese government, BTC China or Huobi, I believe, will cause significant change to the price. I’m concerned that Huobi, the current lead exchange in the world in terms of volume, is defying the Chinese government. I want to know if my concerned is warranted and what the Chinese government will do about it.

Great post

I have been confounded as to the resilience of Bitcoin price in light of the China news. I think Huobi explains it all, the volume on Huobi is enormous.

One of two scenarios will play out:

1) Huobi will for some mysterious reason be allowed to continue operations as they currently are. If so, Bitcoin prices will likley continue to rise in face of a lot of this negative news from China.
2) As you suggest this Huobi volume in China is a bold defiance and we are watching this game unfold before our eyes. Don't the Chinese execute people for complete disregard for Government policy?

I am long on Bitcoin but these swirling events and the sky high valuation are driving me nuts. After reading your post, i think a Huobi shutdown is inevitable. If so, say hello to Bitcoin at $100 or lower IMHO.

[skivrmt]

Any news, either coming from the Chinese government, BTC China or Huobi, I believe, will cause significant change to the price. I’m concerned that Huobi, the current lead exchange in the world in terms of volume, is defying the Chinese government. I want to know if my concerned is warranted and what the Chinese government will do about it.

Great post

I have been confounded as to the resilience of Bitcoin price in light of the China news. I think Huobi explains it all, the volume on Huobi is enormous.

One of two scenarios will play out:

1) Huobi will for some mysterious reason be allowed to continue operations as they currently are. If so, Bitcoin prices will likley continue to rise in face of a lot of this negative news from China.
2) As you suggest this Huobi volume in China is a bold defiance and we are watching this game unfold before our eyes. Don't the Chinese execute people for complete disregard for Government policy?

I am long on Bitcoin but these swirling events and the sky high valuation are driving me nuts. After reading your post, i think a Huobi shutdown is inevitable. If so, say hello to Bitcoin at $100 or lower IMHO.

I do see at some point Huobi shutting down or being so restricted in money flow (ie, cutting operations to fund accounts) that they are essentially shutdown.  I think that will drop the XBT price.  But I also think there is enough support worldwide that essentially it will be another buying opportunity.  I don't think it'll $100.  Way too much support well above that.

[Jcw188]

I have also been amazed at resiliency of BTC price in light of the China news.  I would have thought a drop to around the lower base level and stay there for a while.  Good explanation offered by OP though.  Not sure of a catalyst to go much higher though.

[tabnloz]

A 'ban' in China is really just a test of the bitcoin users & network resolve. Operating despite Govt intervention is one of the major selling points of bitcoin. So, a ban should just see short term specualtors leave the arena. The road was always going to be bumpy in the short term.

[skivrmt]

A 'ban' in China is really just a test of the bitcoin users & network resolve. Operating despite Govt intervention is one of the major selling points of bitcoin. So, a ban should just see short term specualtors leave the arena. The road was always going to be bumpy in the short term.

Well an official outright ban in China takes away mainstream Chinese citizens investors.  And there is potential a lot of those.

[contactluis]

What do you think about the news today that the ‘Ebay of China’, TaoBao, announced that it would no longer allow sales of virtual currencies (Bitcoin, Litecoin, etc) and anything related to Bitcoin (rigs, manuals, etc)  starting next Tuesday?  For people who don't know, there are two ways to deposit Yuan into BTC China, cash deposit and BTCC Voucher. You buy a BTCC Voucher through a number of vendors, but all of them only have stores at TaoBao.com.  So after next week, the only way to deposit any Yuan into BTC China is though cash. Unless BTC China comes up with a new way to deposit Yuan, I don’t see how the exchange will be operational after January 31st.   This leads me to my next question.  Is the Chinese government after BTC China only or are they after all digital currencies or is the ban an overreaction by TaoBao over the new Chinese policy?   

If the Chinese government is trying to drive BTC China out of business, that would require an assumption that the government had direct contact with TaoBao to let it know of their displeasure of having digital currencies (vouchers) being sold at TaoBao.com.  This makes sense because the TaoBao ban basically closes BTC China but leaves Huobi (the leading exchange in China and the world) untouched. I don’t like this conspiracy theory because it is too complex and too publicly visible to pull off.   If you believe that the Chinese government is underhandedly trying to ban Bitcoin and all other virtual currencies you have to ask the question why are they not going after Huobi?  So the next option is the easiest for me to believe in. Lawyers and/or compliance department of TaoBao decided not to risk displeasuring their government for the very small revenue that Bitcoin related auctions bring in, so they decided to ban it.  If this is so, will Chinese investors realize this or believe that this is another step towards the banning (or making it very difficult to acquire or sell) of Bitcoins altogether? 

[Mattius459]

If someone can translate the Chinese forums to see what they are thinking that would be great too.

I have a BA in Chinese, but that isn't saying much, especially when dealing with technical topics such as Bitcoin. Unless you have a real Chinese person who has volunteered to do your bidding then I would be happy try to translate and then paste into the Chinese forum tomorrow. Your questions are my questions and it sucks having the language barrier.

[hgmichna]

There is another aspect that has not been mentioned yet.

China has an enormous apparatus with hundreds or even thousands of government employees to control the Internet activities of its people.

This means that it is risky for Chinese bitcoin owners to use foreign exchanges and banks, because they must fear being tracked and being punished. Even using localbitcoins.com is a problem.

In short, trading bitcoins may be more difficult for the Chinese than one first thinks. This means that there is an additional tendency to divest oneself of bitcoins to avoid these problems.

[contactluis]

Mattius459 - that would be great if you could do that. Thanks

Questions:
1) What are you (the Chinese Bitcoin investor) thinking about doing with your Bitcoins before the Chinese new year?
2) Do you think that the Chinese government will ban Bitcoins or just make it very difficult to invest in them?
3) Is there any regulation that prohibits Chinese citizens from trading Bitcoins in foreign exchanges?

hgmichna - very good issue that you brought up. I'm assuming that it is illegal for Chinese citizens to trade in foreign exchanges but I don't understand why localbitcoins.com would be a problem.

[hgmichna]

… but I don't understand why localbitcoins.com would be a problem.

The Chinese government could keep tabs on people using LocalBitcoins and could crack down on them later. My guess is that the Chinese are generally wary of doing anything on the Internet that could cause them trouble, particularly anything not Chinese.

Imagine, for example, that a Chinese citizen regularly calls up the online banking pages of a foreign bank. Even if the communication is encrypted and cannot be cracked, which is by no means certain, the mere fact of regular communications with certain URLs would already be a problem. The same holds for LocalBitcoins.

I grew up in a communist country (East Germany), and I still have that way of thinking ingrained. (In fact, the modern truth seems to be even worse than the Stasi in East Germany, so we should all get used to that way of thinking.)

[davidgdg]

....In short, trading bitcoins may be more difficult for the Chinese than one first thinks. This means that there is an additional tendency to divest oneself of bitcoins to avoid these problems.

Surely the opposite is true? If you are Chinese and have managed to obtain bitcoins, the fact that they will be much more difficult to acquire in the future for your countrymen is surely a reason to hold on to them?

 

[skivrmt]

Mattius459 - that would be great if you could do that. Thanks

Questions:
1) What are you (the Chinese Bitcoin investor) thinking about doing with your Bitcoins before the Chinese new year?
2) Do you think that the Chinese government will ban Bitcoins or just make it very difficult to invest in them?
3) Is there any regulation that prohibits Chinese citizens from trading Bitcoins in foreign exchanges?

hgmichna - very good issue that you brought up. I'm assuming that it is illegal for Chinese citizens to trade in foreign exchanges but I don't understand why localbitcoins.com would be a problem.

I think these are great questions, but the true question is how active is the Chinese forum to people who are actually in China and own Bitcoin vs. people who just speak Chinese?  I would be very wary of posting anything if I lived in China on a Bitcoin forum.  You know the government is trying to crack down on virtual currency.  You know that most likely have the ability to track website usage and IP address.  Why take any chances?

[Apostata]

Fantastic analysis of the current situation with China.  I am surprised this thread has not gathered more momentum.  In answer to your question about TaoBao, and in hopes of getting this discussion going again, I would imagine TaoBao/Alibaba sees the same writing on the wall as many of us do.  I think the more important question you raised above is

"If you believe that the Chinese government is underhandedly trying to ban Bitcoin and all other virtual currencies you have to ask the question why are they not going after Huobi?"

The answer, I think, is why would they?  Effective December 5th financial institutions are forbidden from dealing with bitcoin (and potentially with exchanges, depending on how you read the announcement).  They have given 3rd party payment providers until the 31st of January to comply with their new rules.  At this point Huobi hasn't really broken any rules, aside from using the CEO's personal bank account which from what I understand is at the least not acceptable and perhaps even illegal (maybe this is why they have switched to corporate account only).  Perhaps the government is playing cool, not going to get into a panic about what this one exchange is doing.  I think they are taking very deliberate actions to pour water over the bitcoin fire in China without looking like they are panicking and struggling to retake control.  I guess we all have to wait and see. 

I also agree fully with your analysis of what could have been the cause of the TaoBao/Alibaba decision to stop sale of bitcoin related items on its site(s).  Alibaba is also working on their IPO, and it would make sense for them to put forth some friendly offerings to the government.  And for anyone who has not read it, this opinion is mirrored in a thread here https://bitcointalk.org/index.php?topic=406637.msg4407494#msg4407494 by user zhangweiwu.

Regarding your questions posted on the 8th:

Questions:
1) What are you (the Chinese Bitcoin investor) thinking about doing with your Bitcoins before the Chinese new year?
2) Do you think that the Chinese government will ban Bitcoins or just make it very difficult to invest in them?
3) Is there any regulation that prohibits Chinese citizens from trading Bitcoins in foreign exchanges?

Have a look at this survey from Sina.com http://survey.finance.sina.com.cn/result/86550.html.  Users of one of China's largest "infotainment websites" were asked (via Google Translate): "Do you still want to buy bitcoins" (你还想买比特币吗).  Of the 3600+ respondents, 67.1%, answered "Don't Want To" (不想).  I'm not pretending to know what bitcoin investors in China are thinking, but if my government told me I had X days left to withdraw money from a certain investment, I would get my money out asap.

I think that there are a few very important questions that are not really being raised or addressed on any of these forums:

1.) If Huobi has found a workaround for getting funds in/out of their exchange, why hasn't BTC China?  They were the largest exchange in the world for a time, why would they just lay down and not fight?  Wouldn't you think the investors who recently put $5 million into BTC China would be saying "hey, why don't you do what Huobi is doing"?  Of course they did.  The reason they aren't going this route is because they know what is about to go down.  If you watch any of the interviews with Bobby Lee recently you can tell that he knows his time is up.  Also, the fact that Bobby Lee was confirmed as the source for the December 16th news about 3rd party payment providers I think is important.  Many people on this forum and on reddit are under the impression that Bobby Lee does not have enough "Guanxi" or relationships with the Chinese government, which is why Huobi has been able to pick up the volume that BTC China has dropped (and some).  The fact that it was Bobby Lee who "leaked" that news shows that he at least has enough relationships to be the first to know about this back room meeting, and the fact that he is not using the same methods as Huobi to maintain his business says that he knows the writing is on the wall. 

2.) I believe the most important question is how can Huobi, a previously unknown exchange, have built such a massive amount of volume in such a short time?  As of today they have a whopping 74.31% of the global BTC market going through their exchange http://bitcoinity.org/markets/list?currency=ALL&span=24h.  It doesn't make sense.  However, if someone wanted to make a mad dash just before the pending January 31st deadline, this would be the way to do it - create artificial volume to give the illusion of a bullish scenario, meanwhile pump the price up creating a very effective buying wall to sell into just before the new regulations took effect.  I have no evidence that this is what they are doing, I am merely saying if someone wanted to do it, this is they way it would be done. 

3.) (and perhaps @contactluis, with your background in the financial industry you are the best to answer this)  If Huobi were to shut down tomorrow, what would the effect on price be?  Or asked another way; what would the effect on the price of bitcoin in 74% of volume were to simply cease overnight?

Very well though out analysis @contactluis.  And I'd love to hear your thoughts on the 3 points above

[sysbet]

Latest news: China's central bank said（Begin recording 1:23:40）, do not fight, do not discriminate against Bitcoin（
Video Link：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm
Text Links：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm?show=t

[sysbet]

About huobi, I would say, a lot of money into the huobi, most of these funds is speculation funds, they are not bitcoin holders. Because buying and selling in huobi no cost and no ups and downs stop limit, is better than in Shanghai and Shenzhen A-share market. In addition, huobi can provide three times leverage, it attracts these speculative funds, high-interest lending function huobi there is a policy risk in China.

[Apostata]

Latest news: China's central bank said（Begin recording 1:23:40）, do not fight, do not discriminate against Bitcoin（
Video Link：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm
Text Links：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm?show=t

Thanks for that.  I am assuming you speak Chinese since you are able to pinpoint the bitcoin reference in the video?  Are you able to translate that part of the text?  A quick read of the Google Translated version says very little about China's stance on BTC, and I can't see anything that says they will not "fight or discriminate against" bitcoin.  In fact it looks like a classic dodging of a question by an official who doesn't really know what to say, with him just explaining what he thinks bitcoin is.  

We also have to consider who the speaker is; according to Bloomberg, http://www.bloomberg.com/news/2010-11-30/china-needs-clear-policy-shift-pboc-s-sheng-says-correct-.html Sheng Songcheng "was formerly the head of the central bank’s Shenyang branch before an appointment as head of the central bank headquarters’ statistics and analysis department, according to a bank official, who declined to be named due to agency rules."

It doesn't sound like this guy is a real decision maker in the world of Chinese politics.

[Apostata]

About huobi, I would say, a lot of money into the huobi, most of these funds is speculation funds, they are not bitcoin holders. Because buying and selling in huobi no cost and no ups and downs stop limit, is better than in Shanghai and Shenzhen A-share market. In addition, huobi can provide three times leverage, it attracts these speculative funds, high-interest lending function huobi there is a policy risk in China.

Great point.  That's really interesting, that those currently using Huobi "are not bitcoin holders".  I have read about the leverage they offer, essentially the offer short term loans if I am not mistaken.  Perhaps this is why there is so much volume; people put in Y1000 and leverage it 100:1 (or whatever) therefore they can buy Y100,000 worth of BTC, and play the market. 

Are you in China?  Would be interesting to hear your take on the situation

[sysbet]

Latest news: China's central bank said（Begin recording 1:23:40）, do not fight, do not discriminate against Bitcoin（
Video Link：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm
Text Links：
http://www.china.com.cn/zhibo/2014-01/15/content_31172976.htm?show=t

Thanks for that.  I am assuming you speak Chinese since you are able to pinpoint the bitcoin reference in the video?  Are you able to translate that part of the text?  A quick read of the Google Translated version says very little about China's stance on BTC, and I can't see anything that says they will not "fight or discriminate against" bitcoin.  In fact it looks like a classic dodging of a question by an official who doesn't really know what to say, with him just explaining what he thinks bitcoin is.  

We also have to consider who the speaker is; according to Bloomberg, http://www.bloomberg.com/news/2010-11-30/china-needs-clear-policy-shift-pboc-s-sheng-says-correct-.html Sheng Songcheng "was formerly the head of the central bank’s Shenyang branch before an appointment as head of the central bank headquarters’ statistics and analysis department, according to a bank official, who declined to be named due to agency rules."

It doesn't sound like this guy is a real decision maker in the world of Chinese politics.

I come from China. Let me answer your question:
1, this one is answering on behalf of the Central Bank of China, Japan's central bank on a reporter's question about China's attitude than bits, so it is understandable that he represents the Chinese government.
2 Prior to this, all messages are Chinese central bank to combat discrimination bit more than we understand the Chinese mainland government to supervise than trying to strike a bit more than a bit, it is very negative.
3, the news today, government officials said the government will not blow himself and discrimination bit more than this is positive news.
4, there is no text version 'does not blow and discrimination than bits', but the video has to say these words, time is 1:23:40 starts.

[sysbet]

huobi users can zoom their own funds, they can borrow by 100 yuan to 200 yuan (or 1B financing 2B), financing interest is 0.2% / day as collateral, the interest income is the main income huobi, buying and selling is free . These users are keen to buy and sell bitcoins, aims to make the difference. This is such a huge trading volume huobi real reason.

[Apostata]

huobi users can zoom their own funds, they can borrow by 100 yuan to 200 yuan (or 1B financing 2B), financing interest is 0.2% / day as collateral, the interest income is the main income huobi, buying and selling is free . These users are keen to buy and sell bitcoins, aims to make the difference. This is such a huge trading volume huobi real reason.

Thank you for this, it is great insight into a confusing situation.