a few years back the Tom Clancy Title Ghost Recon: Advanced War fighter used the drug and economic conditions in mexico as the back story for a conflict that included a military coup. Mexican politicians had kittens, They were pissed!
When the movie District 9 was released, Nigerians became enraged because of the depiction of Nigerian gangs as criminals cannibals and particularly the fact that the head of the gang bore the same surname as a former president.
Lesson Just because it does not offend you does not mean someone is not going to start a big deal elsewhere.
When it comes to Chinese plot lines there are it seems to me two schools of though go for it or 12 foot pole.
You either make a game that risks it all and pushes the stakes to the same kind of conflicts some of us obsess over, or avoided it at all cost by either ignoring all together (Tom Clancys End war for example does not mention the Chinese at all.) or make covering it over with lipstick and painting it all away.