I think what you heard is the western propaganda version of the real Chinese gaming content restrictions. Those restrictions are basically to do with national soverengty and history. It kind of makes sense the western propaganda took that to create a strawman that Chinese games must all be fictional. Perhaps there is some truth some devs choose this because its much easier than navigating the legal landmine of whatever the law decides is too close for comfort.
As you may be aware all games in China must be approved by the SAPP, there is a review process and only a limited number of games are approved every year. There are indeed some strict rules.
It is not easy to find these regulations in English. Here is the best translation of the infamous online game draft last year, it was retracted but it is supposed to be a consolidation of existing rules as well.
Here is the translation of that draft. See prohibited content.
Here is the current(?) 2016 edition in Chinese
::: spoiler Google TL
Article 25 No publication shall contain the following content:
(1) Opposing the basic principles established by the Constitution;
(2) endangering national unity, sovereignty and territorial integrity;
(3) leaking state secrets, endangering national security or damaging national honor and interests;
(4) inciting ethnic hatred or discrimination, undermining ethnic unity, or infringing on ethnic customs and habits;
(5) Propagating evil cults or superstitions;
(6) disrupting social order or undermining social stability;
(7) Promoting obscenity, gambling, violence, or instigating crime;
(8) Insulting or slandering others, or infringing upon the legitimate rights and interests of others;
(9) endangering social morality or excellent national cultural traditions;
(10) Containing other content prohibited by laws, administrative regulations or national provisions.
:::
#2 is a pretty tough one if you want any sort of "geopolitical" game from a western perspective. The Taiwan issue is right away a no-go. Also no Paradox games.