China ban on crypto exchanges actually makes sense

On Friday rumors surfaced that China is planning to ban local crypto exchanges. This rumor created a wave of FUD and $btc price dropped sharply (~from 4650$ to 4000$). Drop was even larger on Chinese exchanges (~down to 3400$). Unfortunately I don't have a crystal ball to predict the future, but I can analyze this rumor and see if there is any line of logic that could lend it credence.

First of all lets look at the events preceding this rumor. Yes china cried big bad wolf many times before and nothing serious followed, but things have fundamentally changed by ICO ban: This is a signal that wider regulation is coming in crypto space within China. Ruling party has your full attention and things might get ugly before they settle.

Why would China ban ICOs first and then exchanges? It seems counterintuitive, but some explanations come to mind: a. to avoid market panic, b. increase chances of ICO refunds c. ICOs don't need exchanges, so banning exchange doesn't automatically ban ICOs, albeit makes things harder.

Now lets look at how China might benefit from this:

1. China has always been wary of capital flight. There are controls on foreign money transfers via banks: upper limits and even manual controls of wire-transfers are not uncommon. Suspicion that bitcoin contributed to China's capital outflow problems has been noted throughout 2016-2017, and exchanges are central to those fears.
2. Decrease internal consumption and thus encourage exports. Electricity costs are cheap, hardware is cheap, labor is cheap, China is heaven for mining. By removing inner consumption market China is effectively encouraging export of $btc and inflow of USD boosting trade surplus.
3. Crypto exchanges don't really provide any economic value, they are the means of money transfer from one party to the other. Local exchange means someone in China is winning and someone in China is loosing, zero sum economic game. Mining on the other hand creates value.

For this reasons I think China stands to benefit from ban on crypto exchanges, but will continue to provide hashing power.