my experience with the oriental characters has always been due to a corrupted record in a table. the record can sometimes be found by sorting the table to have it appear at the top... the record must be deleted.
why xml is unclear.
look into the table(s) that are the source for the query... you also might experiment in writing the query records to a temp table and then attempt to export to xml from a temp table rather than from a query... just an experiment. maybe will point to a solution.