To read the coverage of China's "Green Dam" mandate would make it seem that the world was coming to an end and the Internet would be irrevocably changed forever. Mind you, the installation of censorship technology on every computer abhorrent in our society, and I personally disagree with the policies of the Chinese government in this regard. However, let's look beyond the entire issue of free speech and censorship and think about the underlying architecture.
Some people have drawn a correlation between the unrest in Iran and the 20th anniversary of the Tiananmen Square as the Beijing's motivation for clamping down on the flow of digital information. Yes, it's scary (or exhilarating, depending on your perspective) to see opposition groups organize through social networks despite to totalitarian attempts to quell protests. If you have agents on every PC, wouldn't it be easier to squelch unwelcomed messaging and communications?
The reason for China wanting to have spyware on each and every client sold in their country may be more simplistic in its motivation. Perhaps it's a reflection that China's Great Firewall and attempts at centralized filtering cannot work to scale. The Great Firewall could never keep out all unwelcomed messaging and information.