The justice system in the US is inexcusable, but China's is also not great.
The vast majority of arrests lead to informal "administrative" detentions wherein you are held for (usually) a short time—a few weeks, maybe more if they don't believe you're reformed.
You get picked up one day and they tell you to confess. It's in your best interests to confess to something, even if you think they have the wrong person, because they tell you it will go to trial if you don't, and that would just be so hard on your family, right? They'll highlight their impressive over 90% conviction rate too, so you know if you don't confess you likely go to jail for years and your life is over.
You confess, you go to a detention center, any number of things can happen because it's all informal and left to local officials, and then one day they just shove you back into the street like nothing happened. You're likely out of a job now since you haven't shown up in days, and you get some fun new restrictions on your ability to travel. But at least it wasn't prison.
It's also worth noting all this time that your family probably doesn't know what happened to you.
Another factor that contributes to China's lower incarceration rates is that they often choose not to prosecute "personal" crimes. This would be things like robbery, sexual assault, etc. where the victim is another individual citizen. Usually those are handled via financial compensation, essentially the victim can sue for damages, and there's no need for trial or imprisonment if the offender just chooses to pay.
Their execution or imprisonment stats must be much higher than the US!
That's the neat part! There aren't any. China doesn't publish their stats on executions and they don't permit any external auditing of their justice system. What I do know is that, unlike the US, China does not bother with long prison sentences for those sentenced to death. Usually it just happens right after the trial, so those sentenced wouldn't contribute to the imprisonment rate. But I don't buy into the vague estimate of "thousands" that the UN and Amnesty International claim, so that's probably a negligible statistic anyways. But I would certainly believe China is close to the top globally in terms of executions, even if they didn't advertise it to those of us living there.
On the other hand, we should also start counting "shot by police" as an act of execution in the US. Might level the playing field after that.
TL;DR: Who needs high imprisonment rates when you could just go hard on the Panopticon Effect and make your entire society carceral in nature?
[1] China's administrative punishments law. Note the inclusion of 行政拘留 under 第九条.
[2] the carceral outcomes of China's social credit system.
[3] An overview on Baidu of how party members can be held extrajudiciously. Baidu is basically just the Chinese equivalent of Google but they have their own sources cited.
[4] the administrative litigation law outlining the process of claiming compensation for personal acts.
[5] Like I said, dubious figures, but if anyone believes UK-based Amnesty International is a credible organization, here's their uncited claim of "thousands" executed in China.