How is that game racist? Sure, if there was a game where it encourages slavery or genocide of a race, that would be racist and messed up. But as far as I can see, Kung-fu Chaos is just a silly fighting game.
But, stereotypes have some truth to them or else they wouldn't exist; and sometimes stereotypes can be positive too.
These days, people are too quick to cry racist or any other one of the 'ists'. Recently, there was a play performed by people of African descent showing how bad African slavery was, but it was stopped because people protested it was racist. People are too sensitive these days.