Yes, there are Chinese versions of CD's. I assume the grandmother's money is in RMB instrument not USD. There is of course no point in bringing RMB back to the U.S. except as a last resort, to sit on until the next trip, or trade with a frequent traveler Chinese-American in the USA for dollars at a negotiated exchange rate close to full value. In China, the conversion process to USD by a foreigner does require their passports and I'm not sure if it will be allowed if they are minors. There's also going to be a limit on what can be exchanged back per day ($500 or $1000 at some major airports). Chinese citizens can get much larger amounts converted to foreign currency so it would be easier if the relatives did the conversion, if you wanted to bring the funds back to the USA. I personally wouldn't want to saddle a minor--even a mature one--with the responsibility of carrying that much currency back.

The most logical way to deal with this is is for you to set up a local account in your name (with ATM/Union Pay card access), deposit the cash in it, then access it during the annual trips to China for spending there. You can give the card(s) to your son to use. I am not sure if Chinese banks will set up an operating account for a minor though I'm willing to be corrected on this. This would require you to physically be in China. One of the relatives could also set up the account in their name and then give your son the card, but that is short of total control and requires some trust. Note: Union Pay is increasingly accepted in the USA at point-of-sale terminals, so paying for things in the USA with the Chinese account is absolutely possible now. This would make physical transfer of the cash by your son irrelevant.