I think they do understand it but are not so confident that it won't harm their economy. The news that bitcoin Mining bis hazardous to the environment made it easier for them to pass judgementYou are so spot on this issue because the Chinese government has always been saying that they were shutting down all this Bitcoin mining rigs due to the impact on the environment and the huge electricity that they consume but the truth is that China has so many electricity close to pay so that is just an excuse. The main reason why they are shutting down all these Bitcoin mining rigs it because they do not understand Bitcoin and they can't control or manipulate it