OP, did anyone call the Chinese Consulate with this question? The last time I applied for a visa in Washington I got to overhear several people applying for visas who had police records. I do not know what happened but the receiving consular office both times I heard said that the offense should not be a problem. I did not hear the others but no one left upset.

There are multiple risks here, however small. If the employee's record is discovered it may be very difficult for him to enter China again for a long time. I also hope you have checked with your HR team about the employee's admission to you for your sake.