After reading this thread I had a conversation with my Chinese daughter-in-law. She is also an artist so we focused the conversation mostly on a cultural and artistic bent. Her response to the flag idea was that they don't necessarily go together from an artistic focus and the Chinese are not nearly as "married" to their flag as Americans so they might not see the symbolism there. They will also receive US flags when they become citizens and when my DIL's father became a citizen the US flag what important to him that he got when he became a citizen.
From our conversation (she is not a quilter) she felt from a Chinese perspective something artistic would be more appreciated and valued. Lanterns which are important to the Chinese culture would be easy to replicate in a quilt pattern. It would be something of a modified snowball block. She also agreed that Asian fabric would be nice. Maybe take some of the American colors of red/white/blue and feature them in Asian fabric. Most Asian fabric also has a metallic element to it which would be good too. Something delicate and beautiful.
Another thought would be flowers. The lotus blossom and chrysanthemum are two important flowers. I've seen both in Asian fabrics.
If you use any Chinese characters be sure to get some native to Chinese language to translate them for you. The two symbols for American translate into "Beautiful Country". You might want to incorporate something like this too.
Hope this helps.