What fun is a WW2 game where you fight Nazis, without Nazis? Anyway, instead of Nazis, the Germans will be called The Federation, and all the Nazi-related stuff in-game (like art assets and I'm guessing German accents, if they have problems with those too) will be removed and replaced.
Censorship is awesome!

Was there much in the way of fighting between china & germany during the war? I seem to recall mention of japan invading china but thats about it

I'll bet the Italians must be called The New Republic.
Nope. The involvement of China in the war was solely between her enmity with Japan.

CoH's censorship was already weird (no real Nazi flags or medals, thanks God for the modders). But this is real shit.

Wow, the Nazi killers are so good in China, they wiped out all traces of them in the video games even.

No major conflicts with Germany, but Japan, plenty of conflict e.g. Rape of Nanking. Suffice it to say, there's a reason many Chinese are prejudiced against the Japanese....
Communists censor things. *shrugs*. This doesn't shock me. It's good policy from their perspective. Means of production, the press, etc. If they're owned by the state, the state retains power. If they control media, they control information. Talk to a N.Korean who lived under Juche. That's a really interesting example of how effective media control can be.
Half the world has been re-writing WWII to make themselves come off looking better in the last dozen years. The fact that a government with a record of violating human rights is going that extra step doesn't surprise me. Why should it? Parts of Europe's been doing the same thing and they don't have that kind of record for human rights violations. Hell, they're "progressive".
It's really a shame, because if the situation keeps up, the only way we'll be able to reconstruct the Nazi era in the future will be through quotations from allied documents. Doesn't sound bad? Let's put it in perspective.
You get things like the de-Ba'ath-ification controversy. A lesson in history showed de-Nazification had a few lessons for that situation due to a few similarities. Those who don't learn from history....
@Navagon - Fyi, the swatstika predates the Nazis - by a few thousand years. The Jains.

I'd like to see Nazi's crop up in games where it doesn't make sense, for example, cooking mama.

In one of the DBZ movies (or maybe it wasy Inuyasha?), where the people from hell come back, Hitler pops up. Soooo random.

Cooking Nazis?

Cooking Jews surely

With mustard gas?

Suppose it might also be an anti-capitalist thing. I know, sounds weird but assume that they couldn't get the american forces renamed, they go with renaming the axis forces because everyone knows that nazi's were evil and therefore the americans obviously become the good guys and they don't want capitalists being good
That or they're just foaming dog mad and throw censorship darts at everything and see if they hit
Gives them that extra spice when put on a roll. Mmm mmm thats good jewdog

Germany is really just one step behind china, all nazi realated stuff is censored/edited, and as a bonus censored gore.
the conservative governement faction (CSU) now even wants to censor internet sites, and report those who try to acces these sites.

It is still identifiably German. That's close enough, especially if your country and its people are not particularly familiar with Germany in any other context, which they probably in general aren't.