A State can always develop more powerful hardware to hash Monero if they're motivated to kill it, it's just not profitable. They can't do the same for bitcoin because asics are a result of an arms race and the State can't do any better than the market.

Governments don't need to build better ASICs than the market, they only need to control /who/ can buy new ones. Something entirely within the power of the Chinese government right now, with only modest reputational costs (costs they're happy to pay in other contexts - see rare earth exports). They've chosen not to use that power, for now. General-purpose computing, OTOH, is a much harder nut to crack, the general population owns a huge multiple of the hashing power available directly to governments, and "disarming" them would be... problematic. Sadly most of that hashing power is not being used for XMR. As with Bitcoin, the only way out is forward. Adoption, adoption, & adoption is the secret to both value and security.