Academics in China - promoted via connections
I am a postdoc in China, and have been here since almost 2 years. I am looking forwards to leaving mainly because I cannot cope with their cultural ways at work, e.g. how the local academia works. The supervisor mentioned in this question does speak the truth about gift authorships in Chinese science, thus firstly let me acknowledge his sincere contribution and advice. As another answer states clearly, ultimately such decision lies in the hands of the true first author and his/her advisor. However there is the conflict of standards over international ethics and clan-specific ethics.
Typically what happens is exactly this: a young researcher gets stuck in a moral dilemma with collaborators and is advised to either abide or walk out. The problem is, too often morally questionable standards are not announced before a project starts and abusers rely on the lateness of the dilemma to push for a win-win situation. Adding to the problem, Mainland Chinese people are culturally prone to speak through contextualised subtle insinuations, leaving a lot of margin for belated misunderstanding when dealing with other cultures. 

Surely by this point a decision was already taken on this specific conflict, but I will leave here the main advice to others in potentially similar situation. Gift authorship from my experience seems widespread in Chinese academia. Engaging in scientific collaboration with Mainland China academics is therefore prone to lead to conflicts over ICMJE and similar guidelines on authorships and other aspects. This is not to say gift authorship doesn't take place elsewhere as well, however the local approach tends to be more straightforward and intense than elsewhere (i.e. absolute zero intellectual contribution; numerous added names; openly offended if denied).
As I believe supporting parasitic academics rapidly leads to bad quality science and somewhat kills the original meaning in the career for most people involved, I refrain from providing gift authorships as best as possible while always reciting the international guidelines. I hereby recommend other serious colleagues to do and preach the same, even if some conflict ensues.