For ordinary tourist and business visitor visas for US citizens' US passports, Chinese embassies/consulates don't extensively verify the accuracy of the answer to the criminal history question. I would be surprised if a false answer for that field were to be commonly caught when historically it has not been.

But a willfully false answer provided on Chinese immigration forms can have adverse consequences if the person is caught and found to have done just that.

The expected outcome is what it is for the employee.

For the employer, the risks may be different. The employer shouldn't encourage an employee to fill out the form with a willful misrepresentation, as it could come back to bite the employer from two directions: from the PRC and/or from the current employee if things go really wrong or the employee becomes disgruntled.