The information provided on the site is vague, but based on my reading I don't see why it would restrict connection to any entity other than the PRC and their allies. So Hong Kong might be tricky in the current geopolitical climate, but there are many US-aligned countries which are majority ethnically Chinese such as Taiwan and Singapore. I see no indication this would restrict connection to those countries.
This is very explicitly not racist in its goal, even if it also a bad idea for other reasons. This has nothing to do with Chinese people as a race/ethnicity and everything to do with the behavior of the PRC/CCP government and state run corporations.
I am not defending this policy, but I think calling it racist is absurd.