It's true - Chinese kids age 7 can write less words in Mandarin than American kids age 7 can write in English. However, it doesn't change the fact that the difficulty of the language has nothing to do with literacy rate. China has a low literacy rate because huge swaths of the population don't have access to education.
I learned Japanese and Chinese to a fluent level, and at least from my biased point of view Japanese is a tremendously more difficult written language. Not only do you have just as many "characters" (kanji, hanzi, 汉子, 漢子, whatever) as you do in Mandarin, those characters can have many different pronunciations. You also have katakana (phonetic, 46 + modifications), hiragana(phonetic, 46 + modifications), and just for fun the occasional English (phonetic, 26). And yet, Japan has a 99% literacy rate.
Compare that to the USA's 97.9% literacy rate, a country that teaches English (26 letters, phonetic), and I think the argument that difficulty of the language reflects the literacy rate falls apart.