You are all right. Actually, "rire jaune" means forced laugh. This expression, dating from the XVIIe century, was probably initiated by Saint Simon. Yellow descibes the skin's color of people prensenting an hepatic disturbance. The unpleasantlness caused by this illness stops the deasesed from laugh truly.
Anyway, this expression is used in the previous sentence in order to archieve a light playword. Even if it could be understood as discriminatory, this playword is just a light joke without ulterior motive or insinuation. French people like play with words just for fun!
I think there's another pun with "le Japon te sourit", because "Le Pays du Sourire" is a famous operetta about China and the phrase is commonly used to refer to such countries as Thaïland or Vietnam.
You should definitely try to convey those allusions, but I have no idea how!