I live in Shanghai. This isn’t true. Lots of people over 50 in Zhejiang, one of the richest provinces in China, are functionally illiterate, knowing maybe 1,000 characters. In poorer provinces people who are younger than that will be illiterate. In Western China there are tons of villages where no one speaks Mandarin so they sure as hell aren’t going to be literate in it. A very large majority of people under 30 are literate because in the Han core areas most people finished primary school but there are lots of illiterate people.