I take this as she is chastising an ex-lover who has left her for someone else; maybe a boyfriend who is with a new woman and now she is seeing them together. "She's like a little Chinese / She is Chinese" – that says to me that she is attacking the other woman, possibly making fun of the way she looks as a defense mechanism ("maybe it would be nicer if I said Japanese"). It also sounds like she is seeing them together now ("she comes around you and me" ), but doesn't want to look at it because it hurts her ("I will, I will, I will look away").
I take this as she is chastising an ex-lover who has left her for someone else; maybe a boyfriend who is with a new woman and now she is seeing them together. "She's like a little Chinese / She is Chinese" – that says to me that she is attacking the other woman, possibly making fun of the way she looks as a defense mechanism ("maybe it would be nicer if I said Japanese"). It also sounds like she is seeing them together now ("she comes around you and me" ), but doesn't want to look at it because it hurts her ("I will, I will, I will look away").