This is an excellent question, and a challenging one to answer. It is certainly not necessary for all Microcampus students to speak, read, and write in perfect Chinese, but a certain level of confidence/proficiency makes a huge difference in the experience for everyone.
Soon after the first group of Microcampus students arrived in Xizhou, it became very clear that those with less ability (or willingness) to speak Chinese were at a major disadvantage. They had to depend entirely on their peers to provide support. In the short term this was great for the students with strong language skills to practice, but they grew weary of providing “translation service” several hours a day for four weeks.
As the application process moves forward, it will be important to develop a team of students who will bring a wide variety of skills to the process. The ability to speak and interact in Chinese (at some level, anyway) is certainly among those skills, that will be considered as a part of your application, particularly in an environment where so much of the learning will take place in Chinese.