Officialy, never. But if we count piracy, yes.

potential is there. At the moment it is still developing

could happen, could not. depends.
first off, those restrictions have got to go...or at least softened to get games like halo and destiny approved. it's a bit unlikely that call of duty would get approved, but sci-fi shooters could have a chance. minecraft release there should give consoles a bit of a boost too.

Maybe in the next 10 years. China could be huge and Japan's market is declining. Plus their population is aging.

Not right away, that's for sure. If the restrictions were ever totally released, I could see China getting to where Japan is within the decade, but not surpassing it. Sure, they're the most populated country on Earth, but they're also really poor. They have three times the U.S. population but are nowhere close in GDP yet. That should speak volumes about how poor the average person is there. Gaming consoles are enough of a luxury here in the states, what makes you think the average person in China can afford one? None the less, once all three console makers release something there, and if the restrictions stay off and continue to lessen, I do think it might get big enough that VGChartz might start tracking and displaying it on the front page.

Chinese population: Japanese population ratio is roughly 11:1 at this point, and has a generally younger population.

NIntendo has been in China for a long time under the iQue brand

Well, just like Japan, I believe chinese will have a very strong domestic development suited for the taste of the local player, than, the restricts toons over western games wouldn't impact so much. China may have a huge poor population, but, it also has a huge middle class with disposable income to spend with so called luxury.
Of course it won't be bigger than Japan in the next decade or so, but, if the big three or even a future local company make the right choices for the long term I can't see why it wouldn't be one of the biggest markets for console gaming. If I'm not mistaken China is already the biggest market for mmos, pc gaming is very strong there.

The secret for making money in underdeveloped countries is to rethink the business model for better suiting the country's reality. Like now, when Apple here in Brazil through a partner retail chain is offering the iPhone 4s financed in 24 months of 50 BRL. The monthly payment is something the average worker can pay, and apple profits with the sale and interest taxes.

Just saying in countries like the BRICS, there is lots of people that are crazy to buy the same stuff people in developed countries do, they just don't have the money to do so, and in order to get their diseres fulfilled immediately many don't mind making long term financings and pay in the end 2 or even 3 times the price.

Just like China, loads of repressed demand.

Not even close, at least not anytime soon.

not legitimate consoles...