The map data is offset in mainland China.

There's nothing wrong with your GPS, it's the actual map data. The easiest way to see it is to check the border to Hong Kong in Google maps, you can see the roads don't line up at all and they basically drop you in the sea. Hong Kong isn't offset but I'm really not sure why the mainland is... If you buy a phone or GPS device in China, the software will almost always have an offset correction (but then it sometimes doesn't work outside of China).

I've had the same experience there, it works fine everywhere else I've been besides in China but you can get some map sources that aren't offset like Microsoft's Virtual Earth satellite view (Live maps? Bing maps? Whatever they're calling them...) but there's no fix for the N900 unless a really nice dev wants to apply it to their GPS app, though I don't actually know how because I've heard the offset is different in different parts of the country anyway.

I was hoping Nokia would fix it eventually in - Ovi maps at least - because it already works fine on other Nokia phones running Ovi maps that were bought in China, must be some kind of legal thing stopping them.