Short answer: CCP power struggle.
Falunn Gong was promoted by the CCP in 1990's, while CCP was going thru this "making saint" period where aging cadres were trying to renew their infludence and build a power base with Falun Gong - the same cadres that once were Red Guards during the Cultural Revolution:
http://atimes.com/china/CA30Ad01.html
"In the following months the authorities collected more evidence of a Falungong plot. The sect's leader, Li Hongzhi, had been in Beijing briefly to finalize plans for the April demonstration. The actual organizer of the Zhongnanhai siege was a retired general, Yu Changxin. (On January 6, 2000, the 74-year-old general was sentenced to 17 years in jail, which at his age amounted to a life sentence.)
Furthermore, the very organization of the sect pointed to a politically motivated force. It was structured on the model of the Chinese Communist Party, with cells and an underground central committee, local stations in every province and three lines of cadres ready to replace those who would be arrested in case of a crackdown."
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