Hi William,
Paypal has an efficient dispute resolution system, but I personally do not see it very useful for purchasing from China based suppliers. For one, the fee to use PayPal is quite high for China suppliers and I get suspicious when they offer to use it for payment. I’ve dealt with several who claim to accept it but they eventually asked me to send through Western Union for some reasons, so my transactions with them did not push through.
Credit cards can give you full protection, since they allow you to do a charge back if you received defective, damaged, fake, not as described or if the product did not arrive at all. If the reason for the dispute satisfies its policies for charge backs, the credit card company will then withdraw the disputed amount from its account with the merchant in question.
The reason we mention Paypal among methods worthy to be used when dealing with our verified suppliers is that established businesses will not be jeopardizing their reputation with Paypal, especially if it is the financial lifeline of their business. And add to that PayPal’s reliable way of handling disputes. Nevertheless it is a different story when we talk about potential fly by night scammer suppliers. For PayPal to be able to get the money back, the PayPal linked bank account should be funded. Scammers know this and they can just withdraw all the money and disappear. In a credit card charge back, the money is backed by the acquiring bank, who will be after the individual or merchant supplier (based on a general ruling).
Hope this helps. :)