First, taking a quote out of context is poor form
Second, lots of sports don't need the college system. Many swimmers did not swim in college. A few track athletes did not. Gymnastics does fine and the colleges are not producing the top women.
Not sure I would use China as my standard here, but yes other countries have developed systems and sometimes they send the athletes to the US.
So if all Olympic sports disappeared from college tomorrow, it appears a lot of other countries would suffer since 800 athletes from other countries competed for US colleges. We are rich enough that we could absorb the loss after an ugly period. It might inspire funding to go more directly to the athletes not through the USOPC (that takes a big cut for its very, very large staff). It might inspire a form of government funding (which I am hesitant to advocate for) from lottery or gambling revenue (a lot of European countries fund their sports that way).