You are correct. I was in this case, defending the ethnic-Chinese that were born in the nation they compete for.
Looking at the 2024 Olympics, it seems less than 10% were Chinese-born competing for a different nation (this potentially includes athletes which immigrated to their nation as children). That may be a mild concern, but there are many sports like wrestling and some events in athletics where it is a lot worse.
I think the difference is that there isn't a lot of money in table tennis outside of China. While there's not a lot in wrestling either, it is more spread out globally. A 4th rate table tennis player probably still makes more money competing in China than competing in a different place while a 4th rate Russian wrestler could make more money competing somewhere else.
World Table Tennis is trying to globalize the financial part of the sport so it will be interesting to see if things change. They may have to incorporate these rules too.