I agree that it's inevitable that the Chinese government will ban Bitcoin. However, I think their gradual response is more due to the complex preparation needed

I agree that it's inevitable that the Chinese government will ban Bitcoin. However, I think their gradual response is more due to the complex preparation needed to enforce a ban, than scepticism about its viability as a currency. The great firewall - the infrastructure as well as the body of regulation on ISPs and online services - took time to reach its current level of effectiveness, and it is likely that a ban on bitcoin would also be phased in similarly. This announcement is certainly just the first step. The most likely next steps would probably be: - Ordering financial institutions not to provide services to Bitcoin-related companies such as exchanges; this could happen fairly quietly without explicit announcements. This might already have started. - Withholding trade licenses and other regulatory approvals to prevent Bitcoin-related companies from operating; This can be done without specifying the actual reasons for denial, which would make it hard to be sure that it's happening. This would drive Bitcoin to a small-scale, grey-market activity, with transactions forced to happen directly between individuals. They might leave it at that, or explicitly ban bitcoin, using the firewall to block the bitcoin and getwork protocols as well as and servers used by known web-based clients.