You have a number of concepts confused.

For US tax purposes, worldwide income is reportable and taxable based on US tax law (regardless of how an income or benefit, including pension, is or is not subject to tax in a foreign jurisdiction) unless otherwise excepted or exempted by domestic statutes or modified by an income tax treaty provision.

Instead of looking at how Chinese IIT is computed, which is based on a standard formula, you need to determine whether he is a domicile or non-domicile tax resident because the scope of taxation is different and that determines how his foreign tax credit should be computed.

Exchange rate for income and expenses would generally be spot rates unless it is ratably earned or incurred.  QBU is handled with functional currency being the foreign currency and §988 will apply.  Exchange rates for foreign tax credit gets a bit more complicated - you can refer to F.1116 filing instruction as well as §§905 and 986 for details.

In case you are not familiar with international taxation, you may be well-advised to farm out this type of work to a specialist, especially one who understands both US tax and the taxation system of the country in which your client is based.