It has nothing to do with racism. The problem of "The Little Mermaid" is about twisting a wellknown story to fit political agenda. Everybody born before this "political madness) know who the Little Mermaid is and how she looks like, as much as people know that Queen Elisabeth is caucasian, Obama is mix of caucasian and african and Chengis Khan is east Asian. What Disney did is equal to having a black woman to play the role of the Queen in a biography movie, or an Asian play Obama and caucasion to play Chengis Khan. It is utterly absurd and madness, mocking human IQ. This kind of BS doesn't have market outside of the west.
I'm not sure Chinese audience thinks that far. It's just a story that doesn't resonate well culturally.
The relationship between Ariel and Prince isn't that fleshed out, instead, its just the trope that the "princess" automatically has to like the "prince". Culturally, I think Chinese people prefer more dynamic relationships based on 2 strong personalities. Because the relationship isn't that strong, I think most people find it baffling why Ariel would give up so much to go to the surface. It feels like ideological sacrifice for the sake of sacrifice.
Now I don't exactly remember the story that well, so some details might be wrong. But long ago when I read the story on a whim, those were the details that stuck out to me as nonsensical.