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"Keeping in mind the fact that China neither requires the filing of income tax returns nor taxes small businesses on the basis of profit or turnover" - small businesses do seem to incur some tax although it is lower than in many Western countries, for example corporation tax for companies with under CNY1m turnover is currently 2.5% of profits https://taxsummaries.pwc.com/peoples-republic-of-china/corporate/taxes-on-corporate-income and personal income from an unincorporated business is taxed progressively at rates from 5% to 35% https://taxsummaries.pwc.com/peoples-republic-of-china/individual/taxes-on-personal-income .

Regarding tax returns, there may be no need to submit one for employees whose full income tax liability happens to be processed through their employer's payroll, but others will need to; this system is the same as the UK for example. https://taxsummaries.pwc.com/peoples-republic-of-china/individual/tax-administration

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