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This is some description of the restaurant Happy Buddha from the short story "How to Be Chinese". Bolding is mine.

Look around to see what it’s like in a real Chinese restaurant. The tablecloths are pink and the napkins maroon. The teacups don’t have handles. Honeycomb balls of red paper and gold plastic bats dangle from joins in the ceiling tile. Worry that your people have bad taste. A woman croons in Chinese over the speaker system. Sit in a corner booth and imagine you’re in China. In a minute you recognize the tune being piped in: it’s the theme from Titanic.

Many of the other little cultural references serve clear purposes, often marking something as either American or Chinese. I don't understand this one, however. Titanic is certainly not a Chinese film and yet it's playing in a place described as "authentic" and "a real Chinese restaurant". What is the purpose of this reference? Why this song?

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Although not a Chinese production, Titanic became a Chinese cultural phenomenon.

Briefly, the 1998 release of Titanic in China was the highest-grossing film in Chinese history, and was such a hit that even the then Chinese president publicly took the whole politburo to see it.

For a lot more detail about this, you can read Kaylin Dillon, "Hollywood in China: The Chinese Reception of Titanic as a Case Study", MA thesis, University of Kansas (2015). Some relevant excerpts:

Titanic’s overwhelming adoration in China places it as an important part of popular culture. Regardless of the acclaim or criticism of critics, the wave of craze surrounding Titanic is big enough that it should be looked at as a cultural phenomenon to be explored.

Titanic’s impact on the Chinese box office in 1998 was historically unparalleled and Titanic was the highest grossing film in China for the next eleven years. The feature film made $24.4 million in its first month in China, a phenomenon Chinese media called the Titanic “miracle” (qiji). Titanic was superseded once in 2009 by Transformers only to steal back its no. 1 spot with the 2012 re-release of Titanic 3D.

Titanic enthusiasm spread quickly through China, even to outlying and distant areas. In “Titanic in China”, Jonathan Noble notes: “When visiting Lijiang in June 1997, one of my students asked the Naxi tour guide to sing a Naxi folk song. She agreed to sing, but selected ‘My Heart Will Go On.’ The following year, those selling bamboo flutes from Guizhou to Xinjiang had all apparently adopted the song as their advertising jingle”. In Zhang Yimou’s film, The Road Home (1999), two Titanic posters bedeck a wall in the home of a village teacher. One state-owned company bought tickets for all of its employees to see Titanic after reports emerged that then-party chairman Jiang Zemin was touting character Jack’s role as a working-class hero. All of these examples speak to how quickly and deeply Titanic penetrated various levels of Chinese culture. Titanic’s absorption into Chinese culture is evident, but China overwhelmingly surpasses the rest of the world in its adulation of the re-release of Titanic 3D. While the interest of American audiences waned quickly, the fanaticism of Chinese moviegoers has yet to subside. Chinese theaters demolished the box office sales of all other countries showing Titanic 3D. This is due, in part, to China’s large population and increase in theaters, but China also broke its own record for biggest opening at the box office with the $67 million grossed just from the debut of Titanic 3D.

Other (shorter) reading about this topic:

I read Celeste Ng's short story and couldn't figure out exactly when it's set, but in any case it apparently makes sense for the Titanic theme to appear as part of "real Chinese culture": it's become, in some ways, even more of a cultural phenomenon in China than in the US.

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