The original question in this thread was very basic, so I felt I could help. But I've only worked with Chinese on Win32 systems, not on OS/X or the iPhone.
From your description the first things I would look at are the font family and the char code conversion. So here are some basic questions to start with:
_Isolating a font problem_:
1) Is the html Simplified or Traditional Chinese?
2) Are the same chars showing the same errors on both the Simulator and the iPhone?
3) If the chars aren't right on the Simulator, try setting UITextView to a font capable of SC or TC.
4) If the chars aren't right on the device:
a) Have you tried switching it to Chinese in Settings->General? I know you have, but just to be complete...
b) Check the installed fonts on your device. FontViewer is a free app that will do this for you. Find out which of these fonts supports Chinese and try setting your UITextView to one or more of them. My OS 2.1 Touch has ArielUnicodeMS, STHeitiSC and STHeitiTC. Test with a language-specific font if you have one.
c) How do the bad chars show up in the device's Safari?
_Isolating a conversion problem_:
1) What is the charset of the html docs? This should be found in the html header and will look something like
charset=utf-8;
2) If the charset isn't utf-8, try to find a Chinese doc that is, or convert your docs to utf (some word processors will do this for you), and make sure your NSString encoding is set to match.
Sure hope some of the above helps. If not, I hope someone with more experience will respond.