He's an evil scientist who finds alien-dragon rings that give him powers. Doesn't have to be any backwards thinking in the origin and there's any number of ways to fit that into Tony's background with a little imagination.
First off, the in-universe "origin story" is not as important here as the real-life, definitely racist fictional precedents that informed the creation of the character. Fans may have the luxury to fixate on the fictional universe alone, but creators have to be aware of the impact their work will have in the real world. What marginalized communities in the audience feel about the use of a character rooted in discrimination against them needs to be taken into account, and using that character at all is problematical no matter how much you try to downplay the bad parts. That's why both IM3 and
Shang-Chi made the right choice by essentially throwing out all that baggage and starting from scratch with new approaches, in their own distinct and complementary ways.
Yes, it's possible to "clean up" the Mandarin and downplay the racist underpinnings of the character, as was done, for instance, by the
Iron Man: Armored Adventures animated series. But that's the easiest, most predictable route to take. What
Iron Man 3 did was more clever and subversive. I think it was a braver, more creative move to confront the racism and use it to make a statement, rather than going the more timid, less honest route of trying to sweep it under the rug and pretend it was never there. And what was created and developed through IM3,
Long Live the King, and
Shang-Chi is fresher and richer than a sanitized copy of the comics' Mandarin would've been.