A foreigner, who lives in China, or who plans to come to China, and does need to work, either receiving a salary OR NOT RECEIVING COMPENSATION, MUST have a "Z" work visa, residence permit, work permit and foreign expert certificate.  This includes working for someone else, or owning a business like a bar, or restaurant, or a language school.
Now, there are other things that must be taken into consideration, and unless you set up and register a foreign own corporation (then you can own 100% of your business), you will have to have a "Chinese partner" and at least on paper he would own 51 % and you 49 %, and technically he will be consider at PSB as your boss.  If you choose this route, you will have to protect yourself with a document stating this person owes you a sum of money, payable on demand, and if not paid, the 51% he "owns" of your business will cover the debt.

This is very, very sound advice from HappyExPat above.  Was the original poster looking for justification for F visa status, I wonder?  Or perhaps extended L visa status?  Things have changed around here and things in the country are not as loose as they once were IMHO.  But then again, like everything else, it's caveat emptor.

if you need a job -- you need a work permit and corresponding Z visa.

if you need a salary -- you need a work permit and corresponding Z visa.

if you need a job without salary, or a salary without a job -- you STILL need a work permit and corresponding Z visa.

if you trade or do business without the need for a Chinese company and the business is not based in China and the business is entirely virtual sans income remittance -- you could be on any visa as long as the money is not remitted directly to a Chinese (PRC) bank account.

of course, there will exist a logistical dilemma in trying to defend why you go to an office every day, while not working there, yet living in china without a salary and still having a bank account with a funded balance.

my personal recommendation --

1. create HK bank account and remit your earnings here. this of course only works if your earnings are accumulated in virtual form to begin with (paypal sales, for example) -- this gets rid of the "do you work in china?" question.

2. get any long-term L visa you can get your hands on. this usually comes down to:

a) marrying a Chinese girl. since 2011, this permits you an actual residence permit.

b) agencies that charge up to 21000元 for 1/2-year multi-entry L's depending on the country you're from and the paperwork you can (or cannot) provide.

this will solve your "how do i stay in china?" question.

3. train yourself to come prepared in case of street stops/office stops to explain in the most plausible way that you DO NOT WORK yet you ARE LEGALLY HERE.

note: this only really works IF YOU, IN FACT, *DO NOT WORK HERE*!

note: in case YOU *DO* WORK (read: derive income) IN CHINA - you need a work permit and Z visa - END OF STORY

note: F visas are tied to companies, technically. while they may sometimes be easier to get 1/2-year versions of, when stopped/interrogated they will find that you cannot produce the contacts/names of the company that your agency used to produce the visa.

this advice only applies to those WHO TRULY ARE NOT EMPLOYED, AT WORK, IN SERVICE OR IN ANY FORM/WAY/SHAPE DERIVING INCOME FROM ACTIVITY PERFORMED WITHIN THE PRC - basically internet entrepreneurs within the e-commerce field for the most part, and then some.

All foreigners that own legitimate businesses in Mainland China and that have followed the necessary business requirments e.g. payment of registered capital, passed annual government inspection are entitled to apply for a work permit, 'z' visa and residence permit. However, where total registered capital is less than a certain stipulated figure (this varies from province to province and is usually between 40K and 100K USD), only the company legal representative as shown on the business licence is entitled to the work permit. Below those figures, the government will not allow applications for other foreigners to be made inside the same business. For a self employed foreign nation to apply for a work permit, they must be connected to a business that is registered with a local government, that company must hold a valid business licence and the appropriate company chops (stamps). From the second year onwards, it will also become a requirement that at least one full time Chinese employee exists within the company. All social security payments must be up to date for the business owner and employee. Copies of the local Labor Bureau record of social security payments will have to be given when extending the work permit. You will also be required to produce a copy of the business licence "Fu Ben" with a stamp proving that the company has passed the most recent annual inspection.