The HK government has just made an official announcement. It is NOT withdrawing the bill, but going to defer the second reading (a bill has to be given three readings in the Legislative Council to become a law) and conduct another public consultation.

It's a tactic to buy time. If the HK government can gain support from the Chinese government, it will likely push ahead with the bill again regardless of the reaction of the local population.

Of course they want to pass the bill, but it's a different matter to make it an official stance. In a recent interview on BBC, the Chinese ambassador to UK claimed that it wasn't the Chinese government's intention to formulate the bill. Had the Chinese government voiced support for the bill, it would be nearly impossible for its puppet government in HK to back down, even temporarily.

They cannot have an official public stance on a matter of HK law.

The ambassador's comment was the only thing he could have said, really. I.e. that it is not for the central government to draft HK legislation.

The Chinese government does not like "waves". They probably don't want such waves even more at the moment.

It's not a question of supporting the bill but of question of supporting the HK government despite the unrest it will create.

The Chinese government may conclude (and may have concluded) that at the moment there are much more pressing problems and that they could do without riots in HK.