Quan Chi's arcade ladder ending says yes.

Actual canon though? Who knows. This is the first time he's ever died for real...and even then, we don't KNOW for sure that he's dead, all we know is the Elder Gods chewed him up, he like shot into the sky, and there was an explosion that ended the merger and parted the clouds.
He could have been teleported to Heaven to be imprisoned or some shit for all we know.

That I'm not sure.