According to a Chinese source [1] that I just Googled, 2 main reasons:
1. Need enough distance to populated area. This has to take into account of the situation where something goes wrong in soon after the launch, when rocket is still close enough to the ground to cause damages. The launch location that you see is in the middle of the desert, so it is suitable.
2. Need to consider the landing location. The choice of landing location is limited by the launch location. This launch location allows for suitable landing location which are safe and far from populated area.
(2) is a good point, I never thought of that. So, if KSP is giving the right hints here, it seems like the inclination needs to be pretty exact because they don't have any delta-v left to adjust it for the landing. Maybe South China Sea water landings are not considered because of territorial disputes?
For example, are these islands owned by the PRC?
https://www.google.co.jp/maps/dir//21.1143616,115.9785889/@2...