China might shut down the country's bitcoin exchanges

It is debatable.
I'll be honest, how can you control 1.5 Billion citizens? If everyone is free to do whatever they want, you would have thousands of political parties.
Following this logic, you would never know what your citizens are paying for when using bitcoins.

However, it is also a violation to the Human freedom. Privacy is important. Everyone has the right to have privacy in his life.

That's just an overview of this problematic, problems are deeper than this.