Whether you're wheeling and dealing in China, or just trying to get a few yuan knocked off the price of the Mao bobblehead, there are a few points to consider to help your negotiations go smoothly.
The concept of "saving face" is incredible important in Chinese culture. Essentially this is about avoiding being made to look stupid or to back down in front of others - a concept which isn't limited to Chinese culture. Don't go too far into anything or you may find it REALLY difficult to get out. Negotiated settlements that provide benefits to both parties are preferable to confrontation. A desire to save face may lead people to disguise uncomfortable truths or may cause them to agree with you to avoid confrontation when truthfully they don't believe a word you are saying and they aren't going to do a thing about something when you leave.
Chinese men and women are generally reserved with hand and facial movements. The animated gesticulating of Westerners can seem undignified and even comical to them.
A smile doesn't necessarily mean happiness. Chinese people may also smile when they're embarassed or worried.
If someone looks worried that they many have offended you trying letting them know that everything is OK with a long slow exaggerated, "No problem". If you're worried that you have done something offensive ask but don't expect an honest answer. It is best that you put it out there because that is like an acknowledgement that you might have done something wrong and you know it and you were opening the door to apologize but they allowed you to save face by saying there was no problem so now they are the bigger person who was wise and allowed you to save face and they feel good about how nice they are... make sense? Whew... my wife laughs at how I talk in circles about this.
