The currency of China is the renminbi (RMB) or yuan (or colloquially known as 'kwai') though you will probably see Hong Kong dollars floating around southern China.  ATMs are abundant in most areas of China, and credit cards are widely accepted in metropolitan areas like Hong Kong, Shanghai, and Beijing.

While ATMs have become increasingly common and are generally very convenient, traveller's checks remain a viable option in China.  They can be exchanged at airports, banks, some large department stores, and many hotels at a rate slightly better than cash.  Exchange rates are regulated, so rates are generally about the same anywhere.

Be aware that when exchanging currency in China your foreign money money may be closely inspected and possibly rejected.  The Bank of China apparently has strict rules and will not accept currency that is folded, torn or dirty.  These rules are strictly enforced in some places, especially in the better hotels.       

When exchanging money in China, it is important to retain exchange receipts.  These are needed to convert Renminbi back into foreign currency when leaving China.  You may convert up to half of the amount of Renminbi shown on your receipts. Alternatively you can take currency out of China and convert abroad though exchange rates will mean losses! Note that this only relate to cash exchange receipts. Withdrawal receipts from ATM's will not allow you to convert your RMB's back to foreign currency in China.   Exchange your money at any of the larger branches of a major bank.  Make sure you have your passport with you when doing so.  There will be people outside the bank that will approach you and ask you if you want to exchange money with them.  Avoid them.  Not only is it illegal, you may get ripped off or worse.  The bank does charge a small fee for currency exchange, much smaller than the fee you would pay to exchange your currency at the airport.  Right now the exchange rate is about $1.00  to 6.31 kwai, which means you will be able to buy/bargain a lot with your money.  

Although it is said that credit cards are becoming increasingly popular, other than in hotels, or govenment sponsored gift shops, it is rare to non-existent to find a shop, restaurant or supermarket that takes credit cards.   Cash is definitely king in China.   Try to have a decent amount of small bills, as you will need them to pay cab drivers, etc.

 A helpful hint is before you leave to go to China, open up a separate checking account at your local bank and deposit into that account about the amount of money you plan on bringing or using in China.  Get an ATM card from your bank for this account, making sure the ATM card has a MC/Visa logo.  You can tap into this account while in China, using any ATM machine., and your other accounts at home will remain safe.  All the ATM machines have instructions in English, just look for the right buttons to press.  This is easier than carrying a lot of cash with you at all times, but you will need cash for everything exceot for paying your hotel bill.