Oh, I suspect it goes far beyond that.
When I first got wind of this plan of theirs several months ago, the first thing that popped into my mind was that they were going to try to make it a global default, because of all the "offshoring" and "outsourcing" (read: "MADE IN CHINA"). In other words, any manufacturer that wanted to be able to build their stuff in China -- or buy stuff "Made in China" -- would have to accept that "standard" hardwired into the equipment.
Next, factor in the typical three-year lifecycle for computer hardware -- and, the rapid proliferation of wireless hardware, and before too long, pretty much everything would be "China-compliant".
At that point, Chinese operatives could drive from sea to shining sea, Pringles can in hand, sucking up all the data they wanted. There would be no such thing as "security" anymore for American industry or military.
Call me cyincal, but that's what I think their plan was.
And call me bitterly cynical, but I think there's a better than even chance they'll pull it off yet, even with this Intel "difficulty." They want it bad enough, they'll work really hard at making it worth any company's trouble to implement it -- and the way things are going, they'll probably get the government to lean on 'em too! ("C'mon, China is an important trading partner. Let's not give them any grief over something that's so important to them, we don't want to provoke them into a trade sanctions war, do we?")