Bargaining is definitely OK. You can bargain in shops and street stalls but usually not in large stores or restaurants (unless they offer you a discount, then you know to bargain). If you do bargain, start at about 50% of the original price, and you''ll be shocked at how many times you''ll get it for that.
If you are from the U.S., most prices will be quite acceptable. Try bargaining for fun, but don''t take it too seriously, especially if you are at a street vendor.
Important note: If you go to a street vendor, the prices are geared more towards the local Chinese consumer (unless you are on Sha Mian Island) and not the foreigner who makes 10 times the average Chinese customer. Besides, you are bound to see the same exact item 10 or more times during your trip! Patience goes a long way here in China.