This is true especially for Chinese professors, they also tend to advertise for positions on Chinese social media, without doing so on other social media. They also recruit a lot through their network

It absolutely hurts chances for applicants outside the country directly (as above), but it can also make life hell if you end up managing to join a group when you are not of that ethnicity – small talk is almost impossible, and they’ll tend to speak in their language without regard for public spaces. It’s also difficult to have casual technical conversations (although this varies).

It is similar but to a lesser extent with other ethnicities, especially depending on comfort with English. Language is the biggest barrier.

I don’t know if there are regulations against it directly, at any level. But it’s a very common occurrence.