I like to fight with the morally just factions in video games, but in Mercenaries 2, the morals are blurred. I'm leaning towards China because I strongly dislike UP, and I'm not a fan of this new corrupt oil-seeking iteration of the Allies. Plus, they betray you at the end of the game.
The hard part is that even though the Allies/UP team are worse morally, they seem to have the better technology, (Like the Mantis Light Tank or the Diplomat Heavy Tank, not to mention Allied fixed-wing aircraft.)
One of the main things that sway me towards them is that they strongly resemble the Allies from the Command and Conquer series, of which I am a hugely massive fan of. I play for the Allies in that series.
I like it when the M1 Abrams appears in fiction, but if I pick China I'll have to fight against it.
This may seem like it doesn't matter to most people, but it matters to me: Livery. The Allied Nations vehicle have a green camouflage scheme and that's it, no other decals denoting their allegiance like in Mercenaries 1. But the Chinese vehicles have their roundel, and the Chinese flag itself can be found on their vehicles sometimes, not to mention the fact that the white/green camouflage scheme is much better looking in my opinion than the green/brown scheme of the Allies.
Overall, is China/PLAV better morally? I think I'll go with the better morals no matter what the Allies do or have.