If I had been in Relative Newbie's shoes I'd have done exactly the same without having to think twice.
Given that many Chinese employers have no compunction breaking contracts they've signed with their FT's,.......

The employer did not follow STANDARD CHINESE PROCEDURE by offering a foreigner a contract to sign without a 'subject to satisfactory medical' clause! A mistake on his part. Relative Newbie pushed him on that, irrespective of the immigration laws, and the PSB RELENTED. That is a fact. If YOU choose to co-operate with them, that's your business. But I wouldn't. That's my business, not yours.
The other readers are free to make up their own minds, irrespective of YOUR advice or MY advice! Allowing a medical on yourself is your basic human right, which you may reject if you wish, but by doing so, you MAY have to suffer negative consequences. Relative Newbie DIDN'T! And I doubt he came to China to be popular or a role model. That's his good right too. Nicely done, Relative Newbie!