This is too simplistic a theory. With increased travel you will find that Chinese and Indians will understand each other better. The older Chinese do regard the Indians as cowardly but the younger chinese generation has a different mindset.
Were you aware that the traditional Chinese demon images all vaguely resemble Indians, as do the traditional Indian demon images resemble Chinese, albeit with large eyeballs and beards.
This problem is not going away simply to take advantage of improved trade relations.