Some, ok alot of Chinese banks won't change your money if you dont bank with them. I have a few friends that had problems in Shenzen and Dong Guan. ATM cards work beautifully at most cash machines.
I have never had this problem (in Beijing or in Kashgar), though my experiences have been limited in this regard. My problems with money exchange (TC and sometimes Cash) usually arise from the changes in my signature (it's pretty intricate) and so is never 100% the same. After arguing for a few minutes and demanding a sheet of paper and stating "give me a pen I'll write my name a 100 times to prove it" they usually back down. For some reason, the numerous forms of ID, bank cards and atm cards with your photo and signature don't seem to cut it.
And those hotels rob you blind on the exchange rate.
In theory, they're not allowed to because exchange rates are set by the government (bank=atm=hotel), but I admit that I've noticed some deviations recently.