i actually heard a similar thing about Japan from one of my college anthropology professors, they (sourcelessly) implied that japan refused to test because they didn't want people to know the royal family was actually Korean or something. I could see the Chinese government wanting to just completely avoid any kind of stupid historical culture shock that could come from similar testing.
It's not really a secret that most early Japanese culture was just shamelessly copying China until they eventually developed their own thing. Wouldn't be surprising if the nobility had Chinese or Korean blood in there.
It actually went back and forth sometimes. There are a bunch of loan words from Japanese in modern Chinese too, especially if they relate to science or economics. Like the Mandarin term for "capitalism" is 资本主义 (zīběnzhǔyì) and I'm pretty sure it's a loan word from Japanese, 資本主義 (shihonshugi). Languages are cool.
The worst part was the word for “science”, Chen Duxiu wanted to call it 赛因斯学 (sai-yin-si xue), but overseas Chinese students from Japan brought back 科学 (ke xue) which makes more sense lol.