What should I do if I am arrested by the local police in Uganda because my passport is still being processed?

You can ask the police to contact the nearest Chinese embassy or consulate

to request consular protection and services as well as the most basic humanitarian requirements.

If the police enforce the country's domestic laws in accordance with the law, they will first confirm your identity and nationality. Because without a passport, you are staying illegally. Generally, you will be fined and deported. As for whether other penalties will be imposed It depends on the police's judgment.