I am pretty sure Mandarin is taught at least in some form in Hong Kong. Either that or it is simply a part of their lives. Much like the EU, a lot of those countries are bi/multi-lingual. Some even know five different languages by their 20's. "Knowing" meaning they can "get by", not hold a full blown political or medical conversation generally.
I have no doubt that Ryo learned Chinese, be it Cantonese or Mandarin or bits of both while he was growing up. Did he not have at least a tape recording of that girl singing? Nothing that I am aware of prevents him from doing so, especially if his father and some of his neighbors knew of or were Chinese. However in saying that, knowing the dialect of some small remote village is something different entirely.
Also it would of been interesting, although annoying, if certain people were not able to talk to you. I know there are a few who say they simply do not have the time or to bugger off. But when I went to Japan, the amount of the older generation being able to speak any English was low that I am aware of, while the younger generation were at least capable of simple words in the cities. Running into older people should of gotten Ryo much less conversations unless he already knew the basics of a language. Then again as others pointed out, if Ryo could spoke English and again what stopped him from learning it, a good percentage would of been able to talk to him at least in Hong Kong. He could of at least, "gotten by".
And again you can "speak" a language and not be able to "read & write" it. However kanji being taken from hanzi, I'll argue again it was a bit strange he would not be able to read what was on that object for the quest, unless that kanji simply does not exist. But then he would of simply used a dictionary, if not one he owned, then from the library. He would not of went around for hours or days on end trying to track someone who could read it. o0 But then we would not of had the story we did so it all works out. ^^!