Yes. Unfortunately control of citizens' computing is one area that China leads in. Other national government appear to be envious of this control seek to emulate it.
Obviously this is hypothetical but given the trend toward national surveillance is it hard to imagine that this can happen?
I read the comment as being, "China's key logging exploits are evidence that it likes to control computing and it will seek to enhance this capability." The trend amongst world governments is to seek greater control of computing. I doubt this is going to stop with key logging software and won't be enhanced.