A couple of points here that I have experienced in China. You are to pay tax if you make over a certain amount and I do believe that is 4000 or 5000 yuan a month. Your school should be paying your tax for you but this rarely happens as the school often has a "friend" in the tax office and this "friend" lets the school miss out on paying the tax. I have seen this first hand with the school that I worked at. Non of the staff had tax taken off and this was both the Chinese and foreign teachers/staff. Most of the world operates differently than the west and we are often taken back by this but we do things differently here as compared to China or any other country.