Their culture literally encourages cheating. Is it racist to say things that are fucking true?

It's somewhat racist, but it's also got some truth to it. Anywhere internet cafés are a thing cheating tends to be more popular. They're usually not using their own account, so there is no risk to cheating. Internet cafés are prevalent in China and Russia, so there's a stereotype of them being cheaters. That's not to say they all do it, but it's more likely than most other places.

Obviously, the Russians do too

Yes. China has a huge hacking problem. Anytime there is a ban wave of hackers in just about any competitive online multiplayer game that Chinese players have access to, the vast majority of the IPs banned are Chinese. The gaming cafes over there even advertise hacks.

It has to do with their culture. Chinese culture is very cutthroat and survival of the fittest. It makes people have the mindset of doing anything they can to win or be successful, even if it means cheating. It's not just video games. They have a huge problem with it in their education system, as well. It's also why there is so many cheap copies and counterfeits of different products made in China.

"Chinese people" aren't known for being cheaters in games, except maybe by xenophobic anglophones. However, there are businesses in China that make a living through selling digital gaming items acquired through illegitimate means. Similar to how there are a lot of scam companies based in India - but that doesn't mean "Indian people are cheaters". People in India hate scammers too, and gamers in China hate game scammers.