That doesn't look any worse than a million white villains, especially during the Silver Age.
Meanwhile modern Mandarin looks like this:
The Mandarin isn't a racist stereotype. He just uses standard comic tropes that people misinterpret as racist because the caricatured nature of comics lends itself to that misinterpretation.
Kingpin is a crimelord who is also a giant sumo martial artist. He'd be misinterpreted by many to be racist if he were Asian, because he combines two standard comic tropes with their exaggerated, over-the-top nature.
Batman is a scientist who is also a ninja. He'd be misinterpreted as racist if he wasn't white, because he combines two stereotyped images of Asians. But in fact he's just a combination of two standard comic tropes, and would continue to be so if he were Asian.
Iron Man is a scientist who also builds robots and flies around in a mini-mech. He'd be misinterpreted as racist if he were Asian, especially if he were Japanese, but in fact he is just a combination of standard comics tropes.
Martian Manhunter is the perpetually foreign, passive, vaguely mystical advisor type in most stories. He'd be misinterpreted as racist if he weren't alien, especially if he were black, but in fact he's just a standard comic trope.
Very, very few comics characters don't fit into a racist stereotype, because the broad, over-the-top tropes used by comics are fairly similar to the broad caricatured images of various races.
The result if that if you insist on non-white characters being completely devoid of anything that could be misinterpreted as racist, you effectively ban non-whites from comics, and you especially ban Asians from a genre swarming with scientists, martial artists, and crimelords.