Correct. If you click Pause, or the after a Rebirth when the game pauses for you. Once you open the Cultivation menu, you seem to start fighting or at least it resumes fighting once you leave it. It's hard to tell since you can't see anything but that menu.
Actually, it looks like the game is paused while in the Cultivation menu. I just used F12 to open the console, and all the combat log entries for the web browser were paused. The Pause function definitely stops once you leave the menu though.