Maybe you didn’t realize this, but “American” can be used as a noun to mean a person who is from America. The sentence by itself is perhaps ambiguous, thankfully, that sentence had other sentences close by to help out. As you figure out, those sentence make clear that it was an American in China that died, not someone in America who died.
So cries every pedant in an attempt to justify their boring diversion of a conversation, even as they willfully ignore the context of everything around them. There is something ironic about about a person harping on a boring detail missing all of the details that make their demand for (what they think is) perfect precision unnecessary.
