I found that out first hand when I flew into SFO after a year+ in China. There is such a huge cultural difference between people born and raised in the mainland, and those from other ethnically Chinese but non-PRC communities that it's alienating sometimes.
(I want MORE 广州人, dammit! I will forever consider SZ, DG and GZ home; Guangdong pride!)
[Edit:
Added qualifiers to disambiguate ;-]
I understand what you are saying, but capitalizing a single letter is not really enough of a distinction to rely upon in casual conversation. For example, I will often intentionally describe an american-chinese friend as "Chinese" rather than "chinese", capitalizing the C as a way of signifying importance and respect in the same way you might say The White House or Stanford, rather than stanford. To many, "chinese" simply implies you are too lazy to capitalize the "C". (which is, conversely, why there is an implied value and respect associated with capitalizing)
I hope that makes sense, it is a somewhat amorphous subject and as such difficult to articulate.
Ok, added qualifiers.