There seems to be a lot of China-bashing going on these days. The recent rumor that China is banning Bibles from the Olympic village next year is another instance of black-mouthing. Although the official religion is atheism here, Buddhist temples, Muslim mosques & Christian churches DO exist; and as far as I know, believers of these mainstream religions are allowed to practise their faith freely.
I personally have not seen any persecution of people who worship in churches here. There is a church service held every Sunday in the clubhouse here that is very well-attended by the expat population. I have yet to see any police raids on the place. Worshippers walk around freely carrying their bibles to & from service.
So I really don't know where the rumor started from.