The cause of diabetes appears to be a combination of a high fat diet in conjunction with reduced exercise. Populations that have had historically high carbohydrate intake have not been prone to diabetes so this theory of a high white rice diet is likely incorrect without other factors being present. The prevalence of diabetes in China in 1980 was estimated at < 1%, 2.5% in 1994, 5.5% in 2001, and 11.6% in 2013  illustrating how dietary changes have impacted on disease prevalence.
If we look at animal studies where rats are fed high fat diets, we see:
a high-fat diet that raises FFA results in a gradual increase in
mitochondria in rat skeletal muscle, with an increase in the capacity
for fat oxidation, concomitant with development of muscle insulin
Skeletal muscle insulin resistance then facilitates the development of fatty liver during positive energy balance ( eating too much, not enough exercise ). 
Muscle insulin resistance determines the rate at which fatty liver
progresses, and ectopic fat deposition in liver and islet underlies
the related dynamic defects of hepatic insulin resistance and beta
The fatty liver leads to loss of response to insulin so that hepatic synthesis of glucose is no longer suppressed, and the higher levels of glucose induce higher levels of pancreatic insulin release. The fatty liver also raises plasma triacylglycerols which in turn are toxic to pancreatic beta cells. The accumulation of triacylglycerols in the pancreas, as well as the circulating high levels cause beta cell dysfunction which then leads to a fall in insulin release, and this allows an even higher rate of hepatic glucose synthesis.
The rapid restoration of hepatic sensitivity to insulin following gastric bypass surgery shows that the process is potentially reversible in the early stages before permanent pancreatic beta cell failure occurs.
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