She's encouraging racially based violence... I'm all for free speech, but this really crosses the line.
The closest American analogy I can think of would be for someone to encourage the Ku Klux Klan to "string 'em up!" Seriously, I have Japanese friends that won't go to China any more out of fear, which is probably something the Chinese government doesn't want.
There's quite a lot of violence against Japanese businesses, and sometimes people, in China these days. And that's a bad thing. The Japanese did bad things in WWII, but the younger Japanese had nothing to do with it. Not to mention, in the interim other Chinese have done much, much worse things to their fellow countrymen than the Japanese ever did.
Edit: A year in a labor camp does seem excessive, but yeah, publicly encouraging violence and rioting against a specific nationality of people is not okay, and probably should be a crime of some sort, though probably with a lesser penalty.