Just a few days ago on another forum a traveller reported being caught on this very same technicality because of a two-stop transit in Shanghai and Tianjin.

It's an extremely obscure exception, one I cannot understand given it's limited to Canadians and Americans, and you have my sympathy. But my sympathy's not going to get you very far with the airline.

Complaints should go to the Chinese embassy, which on its website does not mention this exception:

http://www.china-embassy.org/eng/visas/zgqz/

To expect travellers to scroll through the jargon of Timatic first to find this well-hidden trap is not reasonable, but that is the expectation.

Sorry.