It is common practice to take collections into your own hands in China. I have found it is not common for people to hold you hostage when you do not owe them money. Rule of thumb: pay your debts, don't screw over your creditors.
That's a good rule anywhere outside of China as well.
You only have one reputation, you can lose it in a couple of weeks after building it up over a lifetime. Word does get around, and between archive.org and google if you screw someone over chances are it will leave a trail that a future contact will easily be able to find.
