A developer can easily make the the European SDK to Chinese by taking the following steps (described in my "dummies" wiki article shown at the url of my signature):
Start ==> Programs ==> S60 developer tools ==> 3rd Edition SDK ==> 1.1 MR ==> Languages ==> Change to Chinese
However, it seems not so straightforward to make the Chinese input method working by selecting the "#" key on the emulator as normally is done on the phone.
A workaround to solve to problem is to select the ABC key (on which has a pen icon). When an editor control is shown (for example, when composing an SMS message), selecting the ABC key will show up a menu to select the input method. Once the input method is selected, a developer may use mouse to select the buttons (1-9) to type in Chinese or other selected language characters.