Was living under a communist government in China and the USSR as bad as American propaganda makes it out to be? How does it compare to living in capitalist Russia?

Depends on the propaganda in particular. I'm not entirely sure about which area (financial? KGB? Murders?) and which time you are interested in.

What I can say is that there is a completely different understanding about said problems. For example, there was the infamous "toothpaste shortage" that made rounds in USA. Now a lot of Americans I've talked to imagine that the good Tovarisch Ivan walks in shop and finds that there is one empty shelf where toothpaste stood. The stupidity! How will he brush his teeth?

The truth is, there is no shop with full shelves. There are no "toothpaste shelves". If there is a "toothpaste shortage", you can be sure there is a general shortage of all hygiene products. All of them. From soap to cosmetics. It was just impossible to meet the supply. There are a lot of stories of people traveling to the West in 1992 or such and not being able to comprehend what is happening in the shop. Actually understanding the whole concept.

So if you have heard that this one shop has bananas, you run to it. It spreads like wildfire, so you get and stand in line and hope that there will be enough. So, lets break it down... Government papers say that there are 100 bananas in the shop (just an example). Actually only 70 were delivered. About 20 were taken by officials before they reached the shop. From the 50 the shopkeeper placed 10 "under the counter" to give to the "people she knows". So 40 are left while you are standing in line. It was a very common question to just enter a random line you see and ask "what are we queued for?"

Now, the KGB - Americans tend to think that they are spies. While the idea seems to be the same, the methods are not completely "surgical" if you may. There is no lurking around the corners with a "photo-pen" or Bond like device (while recorders were actually widely used.) While their external actions might be important, the internal horror is what matters. That is what actually shaped USSR without it being so obviously seen by American people.

The KGB influence changed during the time. Millions of people were sent to Siberia to die from 1940 to 1945.

From January 1, 1935 to June 22, 1941, 19,840,000 enemies of the people were arrested. Of these, 7,000,000 were shot in prison, and a majority of the others died in camp."

Wild inhuman tortures. At first the ones who got shot or sent out were people who owned something (thus considered the enemies of the working class) and those who had a relative that fought with Germans and such (dangerous and suspicious individuals.) After this was done, there was the relentless searching for the "foreign influenced criminal." You had to be careful about what you say and never too careful to whom you say it. Again, while anecdotal, but many stories about a party where everyone is telling jokes among friends, one friend drinks too much and tells jokes about the government. Among friends. Next day he goes missing. If he has been labeled "enemy of the state" and you start asking questions... "Why do you care where a no-good enemy is? Mmm, Comrade?"

After Stalin's death the repressions became less physical and included more psychological torture, but the society was well "trained" by that time. Imagine seeing a kid 12 years old saying "This president sucks!" Well, it is clear that someone in his family thinks that this president sucks. But if you are in Soviet Union, you have to be careful about what you talk even behind closed doors with your children. You go on a rant how you can never get toothpaste in this shitty country and your child repeats that later in class? You are done for.

I hope I answered to how the world was actually shaped in the USSR in compared to how it might seem while looking at it from the outside. I am happy to inform you that I am not able to tell you how it compares to living in nowadays Russia.