One of our tipsters, Kenneth, pointed us to a Chinese web page (Google translation) showing what appears to be an iPhone running some sort of handwriting recognition geared especially for Chinese characters. According to the post, this is how Apple will integrate Chinese (Simplified and Traditional) input into the iPhone. As you write the character, you are presented with a list of the possible characters on the right side of the input pane.
According to MacRumors, Apple recently started hiring "Handwriting Recognition Engineers," could this mean the iPhone is coming to China soon? Only time will tell, but this should definitely give people something to hope for.