Apple would be considering the idea of producing a specific iPhone for the Chinese market. Cheaper thanks to the absence of the Face ID. On the other hand, there would be a fingerprint scanner below the display. A solution that would keep costs down and Apple has already dedicated a recent patent for it.
The indiscretion comes from Chinese sources in the production chain. Although it is not difficult to believe that some sort of iPhone prototype with these characteristics is real. To have certainty about the reasons and the purpose of the operation is much more difficult.
It is true that the trade war between China and the USA, which has lasted for 18 months has done nothing but speed up the decline in iPhone sales in the Chinese market.
Further encouraging Android-based solutions by local manufacturers. Huawei in the lead, which despite the difficult situation at the international level expects to soon reach a market share close to 50% in its own home.
In short, a cheaper iPhone without Face ID (technology that is now ubiquitous in all the recent iPhones and iPad Pro) seems a plausible choice.
It remains to understand how exactly Apple intends to proceed. Optical scanners are less secure, but they are cheaper than ultrasonic ones.
On the other hand, they only work with OLED displays, which are much thinner (although BOE recently announced it has circumvented this limitation). OLEDs cost more than LCDs, but the price gap is getting thinner.