Actually, the Chinese placement rule isn’t quite as unfair as it would be for one of the big countries. Imagine if Russia could suddenly drop 37 IPCs worth of units in any of it’s original territories? Germany wouldn’t stand a chance.
The thing is, even with the Burma Road open, China usually only gets about 14-16 IPCs per round so they could only place 4-5 men in any territory. If Japan manages to keep the Burma Road closed, then it’s more like 8-10 IPCs per round so they could only place 2-3 men in any territory. Japan should still be overwhelming them overall.
Even if China drops 5 men in one territory, that will make things tough for Japan right there but what is going on in the rest of China? If China is plopping all their new men in a single territory, odds are they are leaving a lot of other territories undefended.
Also, it does make some sense historically. It’s like ghr2 said, back during the war the Chinese Army drew a lot of their new recruits right from the regular population.