Not sure about Xinjiang exactly, but decentralised and autonomous nature of muslim religious authorities usually cause them to not have much political power when under non-muslim government, religious influence in such conditions usually results in what they did, extremist minority.

Tibet is even worse example, now its more or less cooperative, but clergy literally got deposed from power hard, expropriated nearly entirely and since then watched carefully. PRC even directly interfere with their religious hierarchy, look what they did to panchen lama and when current dalai lama dies the tibetan buddhism can very well split because it, which will increase state influence over it. And it's far from only thing.

I won't even mention what happened when Falun Gong overstepped.

outright banning religion.

You do know than beween kissing bishop ring and "outright banning religion" there is a lot of other options?