I looked up the stories about Fang and Xiao recently, having followed bits and pieces from what I read in Jeff’s blog… I do not know much background since I don’t read Chinese… What I found however, does not completely match your story.
Nature news reported on Sep. 21, 2010 that Fang was attacked by hired thugs on Xiao’s directive. The alleged motive behind was that Fang criticised Xiao’s experimental surgical procedure and exposed Xiao’s padded CV, among other things.
http://www.nature.com/news/2010/100929/full/467511a.html
One month later, Nature published an editorial following Xiao’s trial and 5.5 month sentence.
http://www.nature.com/nature/journal/v467/n7318/full/467884a.html
The last time Nature news addressed Fang Shi-min was when Nature awarded him the inaugural John Maddox prize for exposing scientific fraudsters in China.
http://www.nature.com/news/john-maddox-prize-1.11750
If one accepts that Nature or NPG is a reasonably credible and objective publisher, from their reports one could profile Fang as such: a well-known fraud-buster who runs a non-governmental platform against science fraud in China, he success culminating in receiving an international reward from a prestigious science publisher; along the way Fang also made numerous enemies, one of them even resorted to physical violence.
As for Xiao, the most independent source I found was this: NIH has withdrawn his clinical trials: http://clinicaltrials.gov/archive/NCT01096459/2013_08_01/changes
So what is going on?