I believe if you want to do the transit visa you HAVE tohave a confirmed seat out of the country.
Two of us went to China last year, we both used standbyitineraries, one from Delta, one from United, with no problems. Also made hotel reservations on Hotels.comand then cancelled them after receiving the visa. There are multiple on line services to getthe visa if you cannot make it to the consulate for your area, if you searchfor China visa there is a post that mentioned the places we used for this andthe cost.
Without a Visa you might be able to non-rev to Shanghai witha purchased ticket to Hong Kong, just not sure if you can.