Am I understanding the China Card right in Twilight Struggle?
That's correct. The China Card is only used for operation points. What's unique about the China Card is the operations value differs depending on where you decide to spend the points. If you spend all of the points inside Asia (and Southeast Asia) you can use 5 OP instead of the 4 printed on the card. If you use the card anywhere else, or in combination with Asia, you can spend 4.

Additional notes from the Deluxe Edition rulebook:


  9.1 China’s role in the Cold War 
  is abstracted through ‘The China 
  Card’. Either player may play 
  ‘The China Card’ as if it were part 
  of his regular hand. ‘The China 
  Card’ does not count towards the 
  hand limit.


and


  9.2 Every play of ‘The China 
  Card’ counts as one of the Actions 
  (6 or 7) that a player is permitted 
  during a turn. As a result, players 
  may have more cards left in their 
  hand than usual, if ‘The China 
  Card’ is played.