I wouldn't be surprised if her employer tricked her into thinking she had the proper permit, as you suggest. I don't see how that matters. I'm sure that sort of thing happens all over the place. The sort of people who would hire workers illegally are also the sort of people who would lie to them and say it's all legal.

Work without authorization, get caught, get arrested and deported. Happens every day in countries all over the world. I don't see anything even remotely remarkable about this case.

It happens enough in China that it’s a common occurrence. Enforcement of Chinese law makes the employee culpable, not the employer, so the employers see no reason to stop doing that to each new crop of naive foreigners.

So, this one incident isn’t unusual or remarkable and certainly isn’t a reason to avoid tourism in the country.

Tourists won’t have many problems in China (beyond air pollution of course); rule of law wouldn’t be much of an issue to them, you aren’t really living there. Workers on the other hand.....