It can definitely mean that. But I also take it to mean that while China tries to create a single national identity by emphasizing shared history, language, and culture, it still acknowledges and celebrates the uniqueness of each of its many ethnic populations. Despite Western propaganda, somewhere like Xinjiang or the Muslim Quarter of Xi'an being a good example.

That's a Western conception of what harmony means. It's not how the term harmony is understood in a China at all. In fact it's quite the opposite. In the West, harmony is achieved through uniformity. In China, harmony is found in the coexistence of opposites, Yin and Yang.