Hmmm, this is quite a complicated paragraph, so I'm not certain that I've got the meaning , but I'll give it a go:
First, this paragraph is one long sentence with many different ideas and clauses in it. This makes it very difficult to read, as one is never quite sure what clause goes with what subject. In English people usually prefer their sentances quite short (exactly how short is a question of style). Thsi makes it easier to read, because it breaks complicated ideas into smaller chunks.
I'd say that this paragraph should be split into three sentences: one sentence says that foreigners cannot judge Chinese history, one says that they have a sharp sense of which translation is better, and one expands on that last idea. I'd try something like:
Surely foreigners cannot judge Chinese history: this is an essential tenet. They can, however, have a sharp sense as to which translation is better. English is their mother tounge and this provides the gut and circumstance of the play: knowing which is better is a walk in the park for them.
This revision isn't perfect, mainly because I don't really understand the sense of the third section. "The rudementary knowledge is" and "that's the basic bargain" don't appear to be necessary there, but that may be a confusion on my part. I'm not quite certain what it is that provides the gut and circumstance of the play.
If you could explain the paragraph in your own words, I'd have a better chance at helping! ;)