Writer sets it straight.
It started as the closing celebration of the Methodist Chautauqua, before the Chinese were burned out. So it is Methodist. It became quite popular at the turn of the 20th century until World War I, more as an Obon festival, as at that time there was a Japanese tea garden at Lovers Point. So it is Japanese. Then it became a bathing beauty contest event, and after World War II it was revived as a pseudo Chinese-themed festival.
It is speculated that the Chinese were burned out by competing fishing interests, which has little to do with Pacific Grove.
So you can be offended in several different ways or you can embrace the quirky history of the festival, a charming, family-oriented affair.