Genshin Impact censors a number of words, including Taiwan and Hong Kong.
The issue was brought to light by journalist Kazuma Hashimoto, who published a video on Twitter showing how the free-to-download Breath of the Wild-esque PC, PlayStation 4 and mobile game censors Taiwan and Hong Kong within its chat.
According to PC Gamer, Genshin Impact also censors the words Putin, Hitler, Stalin and Falun Gong.
In 2003, China's Ministry of Culture decreed the word Taiwan falls within the scope of "endangering the unity of the nation, sovereignty or territorial integrity".
In April 2020, Eurogamer reported on how the Chinese authorities had attempted to block the sale of Nintendo Switch exclusive Animal Crossing: New Horizons on the country's version of eBay because the game was being used by Hong Kong protesters and others to create politically sensitive user-generated content.
Genshin Impact is from Chinese developer miHoYo, and as such must comply with the country's laws and regulations that govern video game content. As Niko Partners analyst Daniel Ahmad states, all Chinese games censor phrases such as Taiwan and Hong Kong in order to comply with a list of banned words that cannot be used in game or via chat.
Western developers are used to altering their games in order to comply with these regulations - you can't release a game in China without doing so. But western developers rarely censor such phrases in their "home" versions. Geshin Impact is rare in that it is a Chinese-developed video game that has enjoyed breakout global success. In fact, according to analysts, Genshin Impact is the biggest Chinese global video game hit ever.
The obvious solution would be for miHoYo to create a global version of Genshin Impact that does not include such censorship, but as Ahmad points out, "it's not always that simple for Chinese devs specifically."
For example, the mobile version of PUBG censors the world Taiwan in all text chats no matter which country you play from. Chinese company Tencent owns a stake in Korean developer Bluehole and has the licensing rights to publish PUBG in China.
Chris Tapsell penned a wonderful feature on video games in China back in November 2019, reporting from Shanghai on the trials and tribulations of the games business in the country. It's well worth a read.