ORIGINAL: Lucky1
Since you are explaining the mysteries of retreats, I wonder whether it might be possible to explain how damaged items trace to factories. I have always been puzzled about this and wonder (for example) why my damaged Chinese fighter (and often, other units) queues up in Sinkiang....
There is a lot going on under the hood that is rather complicated to explain. This is an example of that. The whole objective (as with retreats) is to have it work intuitively enough that you usually don't question it.
Damaged units look for the factory that has the most unused capacity. This is most tricky with China, because you (should) freeze production of everything in seasons where China has no production ability. This means that every factory appears to have unused capacity.
Capacity is not the only thing that goes into it. There is a check that units can get to a factory, and some funky port-to-port rules (described in release notes), and there is a little discouragement for non-naval units in ports (in an effort to preserve port capacity for naval repairs).
Throw all this in together, and in the case of a tie the region with the lowest region number will be found first. For China, this means Sinkiang.