Facial emotion recognition has been found to be impaired in schizophrenia, although overall results have been inconclusive. A new set of facial emotion stimuli with Chinese faces was developed, using static and dynamic avatars, the identification of which were subsequently validated in 562 healthy control subjects. This test was then used to identify facial emotion recognition accuracy in 44 patients with schizophrenia and 41 healthy controls. Overall, patients identified facial emotions significantly worse than healthy controls (p = 0.018) with a significant main effect for type of emotion (p = 0.016). Patients performed significantly worse in fear (p = 0.029) and sadness (p = 0.037), and marginally worse in anger (p = 0.052). No significant differences were evident in contempt (p = 0.254) or happiness (p = 0.943). Regarding error rates of misattribution, patients overidentified contempt (p = 0.035) and sadness (p = 0.01), but not anger, fear, or happiness. Conclusion, patients of Chinese ethnicity with schizophrenia may have significantly greater difficulties identifying negative, but not positive emotions.