Chinese government ban on bitcoin and other cryptocurrencies has not been lifted, but somehow bitcoin in considered as a property that can be legally owned in China, but its trading is not allowed.

Digital yuan is not something new at all since PBOC has been researching about it in 2014 and it was announced in 2019 and launched in 2020 which is now 6 years ago.

Digital yuan is not a cryptocurrency, although it may use blockchain technology, but not considered as cryptocurrency.

China is a huge market for almost everything these days and that's why many are wanting to ally with them. And this means for bitcoin that it hasn't been opened yet, the market of opportunities for crypto. Because they have given a go signal that they're fine again with bitcoin then many of its citizens will go and buy bitcoin without thinking of any sanction. I wonder what's with their CBDCs because IIRC, they have been one of the countries who has made a lot of noise about it that they're developing one.

For China to update its rules just because they see a great need for Blockchain technology is not same as unbanning Bitcoin or crypto currency for that matter because in truth, anyone can own Bitcoin privately but the issue is that unlike most countries that have come to adopt it as a legal tender or for tax payments, it isn't interested in using or integrating crypto currency into their monetary systems but all it is concerned about is how to take advantage of the Blockchain technology for a state project like digital yuan and other regulated assets tokenization.
They care more about regulations and control than decentralized currency systems of which they may have no control over because they are so tech savvy and it might be an issue they can't control if they allow it.

No it hasn't been lifted but the rules prior was worked on
One of the reasons they were against is was that they wanted total control over their money
And well Bitcoin is decentralised which is quite against that.
And basic generic reasons like Crimes, Risk and the energy it might need for mining.
People do still mine in China.