Sorry for my poorly english, I'm a shenmue fan from china.
And I just heard something about the prototype of Xiuying, from Gadio, a chinese TV-game podcast.
In Yu-san's tour to china, his tour guide Ms. Zhang told him the past of her family. Because her grandfather had worked for japanese during the WW II, her parents suffered persecution and died in the cultural revolution. And her elder sister joined the Red Guards (红卫兵, the group killed Ms. Zhang's parents) after that.
Yu-san got inspiration from Ms. Zhang, he planned to design a character named Zhang Hongyu (张红玉) for Virtua fighter 3.
Finally Zhang Hongyu became Hong Xiuying, and there is no doubt that Ms. Zhang's family story is the source of the plot of Xiuying and Ziming.
The interviews of Yu suzuki in beep MD magazines:
http://pan.baidu.com/s/1jGMuZSa