Personal experience, coming and going:

Living in Shanghai when in China, my AA Barclaycard has seen quite a bit of use. Most of the places I shop at take it fine, which may say something about my shopping/dining habits.

A lot of the smaller places I shop at, though, have trouble even with my Discover card. Quite a few "Restricted card" or "BIN Restricted" errors even when I do convince the merchant to swipe the card, always with smaller acquirers (easy way to tell: if the terminal shows a small local acquirer's logo instead of the word "UnionPay" in Chinese, it's probably not going to like my Discover card). This is a real problem, and I think it needs to be fixed before the chip issue.

I also have an ICBC credit card (issued in China). It doesn't have much in the way of rewards. Not even worth talking about. I keep it because of the multi-currency Visa card attached to the main UnionPay card and because it's my only unsecured Chinese credit card.

Note: I've noticed that Chinese credit cards are benefit-focused rather than reward-focused, so you might want to look for a credit card that provides you with freebies and discounts for things you'd normally do rather than focus on earning miles and such.