The character of the Mandarin is so racially insensitive that I think they felt it necessary. I doubt we'll see Fu Manchu either.
Certainly the Fu Manchu stereotype would be inappropriate. However, there was nothing stopping Marvel from updating the character in a way that wasn't a stereotype, and still use a Chinese actor. But, the original point still holds. China wasn't happy about how the Chinese were portrayed in the Dark Knight, and prohibited the movie's release. Marvel obviously wants to avoid that by simply saying the Mandarin is Persian(or something similar). So now, to please Chinese dictators, Chinese people can't be portrayed as villains in Hollywood movies? The result is self-censorship.