What really stuck out to me was this line that explains how racism benefits the Chinese government: "First, the Han Chinese possess a strong in group identity with a polarized and tightly defined out group. This allows the Chinese government to expect sacrifice and as well as support from the considerable majority of the Chinese people."
Perhaps a lot of these attitudes come from how in many Chinese people's eyes, their golden years were when they had very little outside influence and were able to invent some of the most useful inventions in human history (compass, paper, gunpowder). From the time that they have mixed with the West, they have had some very negative experiences, (as the report brings up, the Opium wars, burning of the palace). Perhaps their attitudes will change slowly now. In my experiences, racism is something that is slowly taught/instilled, and so I don't expect any easy reversal.