I really should be doing homework, but here it goes:
1) There are Chinese who descend from Europe. These are people who's ancestors migrated from countries like Russia and Turkey (e.g. the Uyghur,)
2) Every Chinese state has a Muslim community. The Uyghur are the largest ethnic group in Xinjiang, a near uninhabitable region.
3) Why would the Ten Rings follow Fu Manchu? Why would an Arab terrorist group follow a Han Chinese crime lord? A Uyghur as Mandarin makes for a better fit.
4) Iron Man was created in a time where Communism posed an economic, military, and ideological threat. China's merely an economic rival now. No one's afraid of the Chinese destroying Western civilization (e.g. capitalism). Iron Man 3's Mandarin would need to better fit the times.
5) One could argue that a Uyghur Muslim is the perfect foil to Tony Stark. A Uyghur terrorist living in government-run, conformist China vs. a wealthy American innovator living uninhibited? Why not?
I've been watching TV all morning. My brain feels like bubblegum dental plaster.
EDIT: Apparently the Mandarin's half-Chinese, half-British with Mongolian ancestry. Hmm.