Cash works for me in most situations since I have bank accounts here and usually just periodically withdraw a wad and store in my home safe, rarely using ATM's. Also, I have local (in China and Thailand) accounts with ATM cards for withdrawing local currency directly, and intl bank ATM cards that I don't incur fees for using and which give the official interbank exchange rate. Many if not most merchants here charge extra 3-5% just for using a foreign credit card. I've become quite the Chinese cheapskate and don't like this if I can easily avoid it by paying cash. YMMV.

I just used my (US) card yesterday at an airline office, and in keeping with my SOP, told them to run the charges in Chinese RMB not dollars. They did, no problem. But on the slip in "fine print" was the optional forex conversion and rate had I elected to have it run in dollars--I would have paid an extra 3.5% due to the poor exchange rate. DCC is definitely a sneaky practice. Stay alert out there!