EE Times provides more detail on the history and future of the WAPI standard in China: The security standard has been rejected by international standards group ISO "overwhelmingly." The Chinese backers declined to release details of the encryption algorithm, the development process was closed, and there were concerns about its integration with existing 802.11 standards. The group overseeing WAPI's development is still railing against the IEEE for what it alleges are violations in ethics and procedures in ISO voting.
Intel, in this report, has stated its terms for integrating WAPI: Interesting major companies using the standard, and certification and interoperability.
This article is the first I've seen that's drawn a line between elements of the government that would be interested in monitoring WLAN communications: "Some observers believe the company has close ties with military and security forces, based upon a survey of its backers, whose public backgrounds don't suggest they would have the capital to back a startup." I've said from first hearing about WAPI that there is zero chance it doesn't include backdoors for government monitoring.