The importance of alcohol in the Chinese culture
Drinking is a very important part of the social Chinese culture, if you are in China and want to make friends or business you need to know what drinking involve. Receiving an to eat with a Chinese include drinking, it's a way to show interest to a person to try to create a relationship.
Chinese people are not drinking to see who is the better drinker, but it's rather used by as a disinhibitor, people are less shy, share more and everybody spend a good moment. Of course doing senseless stuff because you are drunk would not be very well considered, you need to keep control of yourself.
If you accept the invitation, you will practice the art of gan bei which literally means dry glass. In China alcohol is drunk by little shot, it's the same for any alcohol: wine, beer, beige… Everybody will say gan bei 干杯(dry glass) and you must drink the whole shot as every Chinese would do, if you are drinking with only another person you can eventually make a deal for a ban bei 半杯(half glass).
By rejecting an invitation you basically refuse to know more about the person, to create social link. Trust is the base of any Chinese relation, for professional or friendly purpose. In a case of a professional meeting, do not except to close a deal at the first meeting, you should first know you interlocutor and create trust between you. By skipping this step, the chances of closing the deal are very low.
A friend of mine, Jack, is doing business in China since 10 years, is absolutely not drinking. I asked him how he handled that, here is his very interesting answer:
Years ago as I was getting started I had a lot of conflict and confrontation with this issue because most chinese will not listen to any reason why someone won't drink. Local Shanghai people are more open minded and do not care, but northern and generally non Shanghai Chinese do care, and do not care about your excuse.
In the beginning I would simply let them get drunk and they would assume I am drinking with them even if I was drinking bottled tea in a glass. Later on I spent less and less time with them as my partner and other people we hired would do the drinking for me.
One interesting point is the culture is already changing in Shanghai, this city is hosting around 180 000 foreigners and Chinese are less strict on culture facts. However Jack can confirmed that there is no way that you can't drink during a professional dinner, it's just make no sense for them.
One good point is that Asian people are generally not processing alcohol well and are getting tipsy pretty fast, however I imagine that with some training they get better and better. So if you go to China, be ready do drink, and don't forget this very important word, gan bei!