If the US decides to use cruise missiles, ballistics, or whatever on Chinese civilian targets, then in that situation, China would have to first remove the regional threats (if that hasn't already been done) from which those strikes are carried out and consider retaliating on US civilian populations. China doesn't have the H-20 yet and won't have a significant strategic range bomber fleet for at least another decade. It doesn't have SSGNs like Russia does. It needs to build up both ASAP. SSGNs are a step below the escalation ladder compared to SSBNs and SSBNs won't be used to launch missiles with conventional warheads since China has relatively few of them to waste for that purpose.
In the meantime, in order to maintain that ability to retaliate against conventional strikes on civilian centres, China ought to produce more intercontinental ranged missiles delivering MaRVs and MIRVs. Building several hundred DF-41 and arming them with conventional warheads is actually much easier, quicker, and cheaper to do than building a few dozen H-20 and SSGNs or building up regional bases around the US to commit the same retaliatory strike if China is hit first. The US has bases not only for the purposes of launching offensive weapons out of. China doesn't have those extra needs so those expensive (and in China's case impossible) bases are not worthwhile.
Theoretically you're not allowed to use nukes if you were hit with conventional weapons. So how can China balance the US base threat? It can of course destroy them but will take significant hits before it can manage that. Simply said, China needs to build up even more ICBMs and focus on getting a fleet of SSGNs that are capable of approaching continental USA. Oh and a few dozen H-20s would certainly make the Americans think twice about sending thousands of conventional missiles at Chinese cities. China is in defence from aggression in these situations so every retaliation below using nuclear is totally justified. The problem is China probably doesn't have that many DF-31 and DF-41 to use with conventional warheads. It also is not even close to fielding H-20 and any SSGNs, let alone do that with numbers. What it can do in the meantime to guarantee the Americans don't initiate strikes is to scrap NFU and directly tell the Americans that any conventional strike on Chinese cities would mean a nuclear response from China since it has no other alternative at the moment. To be honest, the Americans know that well enough. NFU is just there for political and diplomatic purposes.
