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I talked with many Chinese international students in the West & I am always surprised that they all only know about the Taiping Revolution (it killed more than WWI, even though it is neglected outside China in high school history), but they all don't know about the Dungan Revolt that also similarly killed more than WWI (I call it: Western War I).
I am going to guess what the Alternative History of China would have been if the Muslims had not been genocided & it would probably be a lot similar to my country, India. Even though initially the Hui (Note that Hui are ethnically the same as the Han & only religion was the differentiating factor; just like Pakistanis & Indians are similar racially, this is different from the Xinjiang Uyghurs, who are racially Central Asian & not East Asian. The Hui were also called "Hanhui" as they were Han people who converted) started the violence, the Han, in retaliation, basically genocided them, with their population today being only 11 million (a mere 0.8% of China). For comparison, the largest Hindu-Muslim war (due to Aurangazeb's fanaticism) was the Deccan Wars, which had lower casualties, killing 5 million, but the stronger power was the minority Muslims, so most of the dead were majority Hindus & it didn't change the percentage of either side much.
1. Two-Nation Theory: In British India in the 1930s, there was a theory called the Two-Nation Theory that said that the Muslims of the Indian subcontinent couldn't live with others (Hindus, Sikhs, Buddhists, Jains, Christians, Parsis (Zorastrians who ran from Iran more than 1000 years ago & settled in India & today the main surviving Zorastrians) etc.) because they claimed their culture was completely different. This ideology later became violent & caused the forced displacement of 20 million people & the death of 2 million people. Although the violence was started by Muslims (due to Jinnah's Direct Action Day speech, where he incited Muslims to fight as Hindus opposed partition to create a secular country), the total dead had 1.2 million Muslims and 0.8 Million Hindus+Sikhs.
Now, in this timeline, inspired by the movement to create the "Islamic Republic of Pakistan", the NorthWest China region (just like the NorthWest part of Indian subcontient is now Pakistan) starts a movement for the "Islamic Republic of Chinistan". IRC helps the PRC & ROC to violently defeat the Japanese, just as Jinnah & the Muslim League helped Gandhi to nonviolently defeat the British. Once the war with Japan is over, they will declare independence.
2. PRC & ROC conflict is gone: Their entire conflict with ROC (Taiwan) is really the most pointless hate ever. They are culturally, linguistically, ethnically, etc., the same.
In this timeline, their relationship would be more like India & Nepal. Just like Indians & Nepalese have freedom of movement/work without any visas, Chinese & Taiwanese can easily go & work in the other without visas, etc. They would be strong allies.
3. China-Pakistan alliance is gone: Ever since the Sino-Soviet split, Pakistan has been China's most important ally, even more so than North Korea. China doesn't ideologically agree with Pakistan on anything, but China wants to be the only big power in Asia & doesn't want India to become as powerful/rich as China, so they give weapons & money to Pakistan just so Pakistan & its will be a dead weight on India's development.
In this timeline, Pakistan & Chinistan would be allies as their founding was on the same ideology. So, China would likely ally with India to tackle the Chinistan-Pakistan alliance. China wouldn't do the 1962 surprise war on the very friendly India to do a cheap land grab of Kashmir.
4. Allies to Pakistan-Chinistan: The USA doesn't want China & India to be too powerful, that is why they support Taiwan & Pakistan, not because they genuinely care about the self-determination of the Taiwanese.
In this timeline, the USA would give weapons to Chinistan & Pakistan (just as they currently do to Pakistan) as a weight against China & India. Also, most Middle Eastern countries will likely help Chinistan & Pakistan against India & China.
5. Atheism wouldn't be big: Today, China contains more atheists than the rest of the world. This enormous rise in Atheism was due to Mao. Mao's mother was a devout Buddhist who once asked a Buddhist monk to raise Mao. Nehru, the architect of post-independence India, was also a very strong atheist who disliked religions as dogmatic nonsense. But due to the communal nature of Hindu-Muslim differences, Hindus became more Hindu & as a reaction to Islamism, the Hindutva movement was created. Due to such an increase in religiosity, Nehru, the 1st PM, couldn't convert the nation to Atheism.
In this timeline, the Chinese will also have a reactionary radicalization against Islamism & create a stronger religious identity around Buddhism, Confucianism, and Taoism. As a staunch atheist, I feel that's bad. The Two-Nation Theory of Chinistan would consider these 3 religions as similar cultures & can live in a single country, but Islam is very different than these 3.
6. TFR scare: Hindutva constantly mixes truth & conspiracies to scare people about the fertility rate. They talk about demographic war etc. is a conspiracy, but some of what they say is true, like Muslims went from ~25% of the Indian subcontinent in 1947 to nearly ~35% now. They are scared that poor Hindus & rich Muslims have the same TFR.
In this timeline, if we assume China's demography similarly collapses & fertility drops below 1, they might be even more scared & make even more conspiracy theories that their enemies will become more populous than them in a few decades & that would increase their security risks.
7. Uyghurs: Even in this timeline, Uyghurs are still going to be persecuted, although a little less. Hui will dominate the population of Northwest China. Uyghurs are ethnically Turkic, while Hui are ethnically Han. This will be like how Kurds are now persecuted in Turkey for being an Iranic/Indo-Iranic ethnic group. Also similar to how Indo-Iranic language people like Balochis & Pashtuns are persecuted by the Indo-Aryan speaking Punjabis & Sindhis in Pakistan. Also, how the Bengali genocide happened before Bangladesh was created. The same religion doesn't mean language differences disappear.
8. Shared culture & language: Pakistanis grow up watching North Indian movies, as the Pakistan language is Urdu, which was made by sanskritizing the Hindustani language that was developed in Uttar Pradesh during the Mughals. Due to religious communalism, Urdu increased the % Persian words in Hindustani, while Hindi decreased it. But both are highly mutually intelligible.
In this timeline, Chinistan will speak a modified Mandarin with a high % of words from Persian & Arabic. Chinistanis will also grow up watching the enemy country's Chinese movies & TV shows, as the large population obviously produces more movies & shows than them.
