The Chinese are paranoid about westerners making fun of them. Anything that can be perceived as an insult often will be, whether it's intended as such or not. I don't know but it seems to me that the drunk foreigners didn't mean to insult but it seems like it's being taken as such. As for the first case yes it's very true that you see that kind of thing in China fairly often.
I lived in China as a child in the 1980s and while I was very young (6 when I left) I remember enough of it to know what it was like. I've also been back several times and traveled elsewhere in Asia. Back then China was even more rural and peasant like in the big cities than it is today. You saw this kind of thing even more then. Many of these people are rural peasants who don't know any better. Others really DO have mental issues. The fact that it said she didn't pull up her pants suggest to me there is something else going on here than simply needing to relieve herself.
The other thing is that China is very embarrassed at the image it has developed due to such incidents and in many places is desperately trying to stamp out the more crude aspects of its rural heritage. My father recounts a sign he saw (he read's Chinese) in a men's washroom next to the urinals that said "one step closer is one step for man kind". Parodying the moon landing it meant that people needed to step closer to the urinal to not make a mess.
At any rate I don't care for a lot of expat coverage of China and in fact may countries. It's often tinged with semi racist overtones. Please note I'm not accusing you of anything here.
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