Well, strictly speaking, UTF-16 is not required for Chinese (or, CJK* scripts in general). All of Unicode can be represented, even if the CJK characters can be, on average, stored more space efficiently on UTF-16 than in UTF-8.
What is really needed is:
1. The engine's text code to be able to handle some of the characters way outside of the standard "Latin" script/sections (some chars have some interesting rules that need to be applied to render properly, like combining characters).
2. A font that has glyphs (the "letter pictures") that supports the ranges you want to support.
3. Your specific GUI is prepared to handle such characters (generally, whether your UI layout still works if you throw in these chars. Usually mostly handled by the engine, but it is always good to check)
I know that the CLR and C# are defined to be able to handle #1 just fine. Not sure about mono (specific implementations can be buggy with these complex rules). Also not sure about Unity (though I would imagine so; it does seem to be a big enough project such that the market for these languages is too big to pass up)
From what I understand, there has been very little testing with #3.
However, also from what I understand, the BIGGEST limitation right now is #2. The font AI War uses does not have a very expansive glyph set; the font used right now does not have Chinese characters.
Given how central to the "look and feel"/theme the font is due to how much text there is in the game, it would be hard to find and licence a good replacement font that still "fits" the AI War "look and feel". Not to mention all the UI layout choices (sizing especially) that probably rely on the exact sizing and spacing of the current font.
*CJK is NOT a discriminatory term or a term used to minimize differences between Chinese, Japanese, and Korean. Instead, it is a industry standard way of referring to the characters and writing system "properties" that those three languages happen to share many elements of. It isn't just restricted to those three languages either, other languages that have characters that are similar to those "traits" are also under the banner of "CJK" (like Vietnamese). An unfortunate term perhaps, but it became the industry standard term, so now we are stuck with it.
