I just read about the Serbian man who beat up a taxi driver and was held accountable even though the taxi driver was likely acting illegally. He charged the Serb a 50% return fee for taking him to a location that he wasn't likely able to find a return customer. The Serb refused to pay and punched the guy. The cabbie is laid up in the hospital hoping to get a lot of money from the Serb. The police will likely hold him until he hands over some cash.

A situation that happens about 50-60% of the time in China is that you'll get cheated at a local market or restaurant because you're a foreigner. I'm fully aware of this fact. It isn't something that you need to judge as being 'right or wrong'. It is just a simple fact in China. Cheating a customer out of 2-3 yuan is considered 'clever' here by such people and not dishonest as it likely is considered in your home country.

First, expect to be cheated. If you do, you won't be disappointed or angry when it happens. Chinese people already know this. However, since you are looked upon as a 'rich foreigner' it is far more likely to happen to you. It is part of the culture in China. Accept it. Expect it. Or, go home. It isn't going to change.

If you get cheated, accept it and don't go back to that establishment. If they did it to you once, they'll do it again. I know that the logic is that they will cheat themselves out of any future business that you'd give them. They don't think about that. They think about the rush they get by having cheated you out of a few yuan. They get a bigger rush if they know that they've cheated a foreigner. Of course, it isn't smart. They could make hundreds of yuan from you in the future, but, it isn't likely that they'll think about that.

Also, don't confront them. They'll deny it 100% of the time. There's no use in confronting them. If you want to punish them, never go back there and give them any business in the future. That's hundreds of yuan that they could make from you as a happy customer. But, anyone that needs to beat you out of a few yuan, isn't that smart to begin with. My experience has been that they'll be out of business in a few months anyway. Just pay it and don't go back.

Second, avoid having a nightlife. Especially you should avoid bars. There are too many horror stories that I've heard and seen with other foreigners first hand. Remember this. YOU AREN'T CHINESE. Things are going to get blamed on you if you're near trouble even though you had nothing to do with it. Don't think that you'll get justice later. You won't.

Third, comply with the police with a humble and positive attitude.

I got stopped by two police for riding my e-bike in the bus lane. I was following nearly a dozen other e-bikes whose drivers where were doing the same thing. But, I was the only foreigner. I immediately confessed 'wo cuole', 'I am wrong'; 'ni duile', you are right. I made no defense because, I was in fact, wrong. It doesn't matter that a dozen others just did the same thing. They are Chinese. I am the foreigner. They stopped me. No surprise.

They scolded me in Chinese and English (using Baidu translate). I never defended my actions and was more than willing to pay the fine (I think it would have been 20 yuan). They continued to scold me for some time. I continued (with a humble and sincere attitude) admitting that I was wrong and that they are right. They let me go on after detaining me there for about 20 minutes. No fine.

Do everything that you're required to do as far as your visa, passport, etc. All of my personal encounters with police have turned out well. It is annoying and a bit intimidating (with all of the stories you hear) that they'll stop you on the street for no other reason than your white (or brown or black) face. But, remember, you are used to justice and fairness. Don't be naive in China. YOU are the foreigner. Things won't go well for you no matter what. Even if you are victimized by some unsavory people (I've experienced this myself). It is best to not even report the crime. Suck it up and accept it or, go back to your home country. Chinese justice and the justice you're likely used to are two completely different things.

Follow my advice and you'll have a far better experience staying in China. China is a wonderful place if you know how things work for foreigners and are able to accept them. If you can't accept them, go home. You're not going to change them.