This paper explores the cross-cultural reception and reinterpretation of Latin American magical realism in China through the theoretical lens of David Damrosch’s concept of “refraction” in world literature. It argues that magical realism, originally a postcolonial narrative strategy rooted in Latin American historical trauma and political critique, underwent significant semantic transformation upon its introduction to China. Influenced by Anglo-American critical mediation, delayed theoretical contextualization, and domestic market forces, early Chinese readings often reduced magical realism to a stylistic or fantastical mode, overlooking its ideological depth. However, as Chinese scholarship and literary practice evolved, a more historically and politically grounded understanding emerged, enabling a creative synthesis between magical realism and Chinese cultural experiences. The paper concludes that this process of misreading and reinterpretation, while initially problematic, ultimately contributed to the development of a distinctive Chinese magical realism and enriched the global literary landscape.