No. The Netherrealm was fought back by the Special Forces and the rest of Earthrealm's warriors 20+ years ago. Obviously Earthrealm survived the fight, and things are still happening - Johnny is still making movies, Jax retired and became a farmer, the Special Forces is up and running, the Shirai Ryu is flourishing, etc. It just so happens that the "ruined city", which I assumed you are basing this idea on, was probably just so completely wrecked that it was unsalvageable and abandoned by the government of whatever country it's located in.

But a post-apocalyptic earth doesn't necessarily mean that it's competely deserted & everyone died, there can still be SF, etc

True, but the game gives off the impression that everything is "life as normal" and if you accept the comic book as a tie-in (which I can't really bring myself to do), things all seem pretty hunky-dory there.

Not quite. The Invasions have really taken their toll on the Earth as we know and its civilizations. MMA fighting to the death is now allowed and the Red Dragon is worshiped as a religion in Temples around Asia.
Yeah, technology, a political hierarchy and sunny beaches still exist, but people now know about other species living in the universe and their beliefs have been shaken, their laws changed or disregarded. I'm not sure if China has a ruling government anymore, as the Special Forces seem to have full authority in the name of American values and by order of the US Secretary (referenced in the game during Johnny and Sonya's fight)

The MMA deathmatch was stated to be illegal. That is the opposite of "allowed." Also pretty sure those Red Dragon temples aren't exactly a recent or public thing.