There is no such thing as 'Chinese culture' or 'American culture'. China and the US are political entities comprising as many different perspectives on life as they do ethnic groups, family units or even people. Yet, if one wants to talk about cultures at all, one invariably falls to generalising.
This is not some sort of false intellectual exercise. The reason that generalisation is so common is that it taps into human instinct. There are at least two compelling psychological incentives behind the impulse. First, there is what some psychologists call 'cognitive parsimony'. The brain has limits to how much it can store, so people spontaneously edit, organise and simplify. This can be seen in the way that young children like to talk over the chief events of the day - a way of eliciting the help of adults to sift through experience. Adults are more practised but they, too, yearn to talk over novel events to help sort experience into order.
A second reason people think in sweeping terms is because the alternative - impenetrable variation - is the enemy of meaning. Meaning is a psychological necessity. To find it, people reduce the unwieldy mass of their experiences to a sort of 'Greatest Hits' of understanding; a bank of rule-of-thumb meanings that they constantly review, both independently and in negotiation with people around them.
In other words, people do not just let experiences wash over them or file them away in their memory unexamined. They immediately go about attaching their own meaning to them and incorporating them into their overall world view.
Problems arise when an individual attaches dysfunctional interpretations to his experiences or when he fails to find meaning in them at all and therefore feels he is losing control or going mad. This is why people settle for broad-brush inaccuracies. The choice is not between truth and fiction; it is between one abbreviated understanding and another. In fact, people live, noted German philosopher Hans Vaihinger, not through reality but through 'functional fictions'. To illustrate, most people find it is impossible to get their minds round the concept of the infinity of space. The notion just sits there. We are told that it is true, but in our everyday lives, we operate with a humble set of home-made conceptual tools. We settle for thinking of the universe as just very, very big. So it goes with people: we boil down infinite human variability into convenient categories, like genders, classes, ethic groups, nationalities, age groups, and so on.
The instinct to find meaning - to impose some sort of comforting, graspable order on the disorder of living - can lead to problems. Generalisations can be used - and abused. Take prejudice. An individual automatically ascribes certain characteristics to the Japanese, say, based on his reading of the world. He then goes on to use this as a working template for 'Japaneseness' until such time as something happens to modify his view. Of course, a particular Japanese friend may influence the template. But, unless there is a good reason to change, people generally stick with their preconceptions - indeed, they are typically willing to fervently defend them despite the fact that they were often formed blindly.