In the long term, yes. This will temporarily stifle the Chinese markets and crypto sector. That will allow the US, Japan and others to increase their respective market shares in regards to trading (spot and derivatives).
However, there is a twist here. Bitmain is the largest chip manufacturer in the industry. They just stopped taking BTC payments (payable internationally). Now they are only accepting CNY payments. They didn't accept CNY payments previously.
That means two things. Mining may become even more centralized within China because international customers can no longer pay in BTC. It also means that, for the time being, the only way to legally invest CNY into BTC is to buy mining hardware. It creates a very interesting situation, and I'm not sure exactly what it means for the price.
Doesn't that also mean that there is a gap on the industry to meet the international demand for mining chips, that is, without converting going through the trouble of converting your money to CNY?
I'd say this is an opportunity for another company to step up and grab the lion's share.