As skeptical as I am of government in general, and perhaps the chinese one in particular, I find it very hard to believe they would put a suid root binary with a password in the flash... What would be the point of that?
Now if it was some daemon that set up a listening socket and linked to some APIs, ready to let an unidentified external party hook into the phonebook, or something like that, then I'd be screaming government, bloody government! :)