Pollution and squat toilets depend where you are in China. I don't even count Shanghai as China, as it could be a modern city in any country in the world. It's certainly not a normal Chinese city. Beijing is more Chinese though, and certainly has squat toilets in many places.
If you go to smaller cities, then yes, squats there.
If you wish to work here and do so for a large multinational in one of the big three cities, or even some of the 'second tier' cities (Qingdao etc), then you're probably going to be more than fine. However, smaller, local, companies will take some getting used to as they probably won't be used to the strange western working habits, such as not randomly being called in for a non-urgent meeting at the weekend. Chinese work habits are... not western work habits.
Pollution is bad in the big cities yes, but coastal cities like Dalian or Qingdao are quite nice.
(I've been living in a number of cities in China over the last ten years, so talking from experience here. My blog about living in China: www.ChinarensBlog.com)