As I mentioned before, Chinese people tend to stand closer than Western people do while talking, even when they are not crowded. One reason I can think of is because they do not have enough land, and that is actually one of the reasons to explain this behavior.
However, the main reason is that it is a sign of politeness and trust. According to Chinese social culture rules, if you stand far always from your friend or colleagues, they may take that you are unwilling to fit in and are unfriendly.
Chinese people will show more affection to the same gender than Westerners will. For example, if two men walk together who are close friends, they may put their arm over the other man's shoulder and stand very close (no sexual intention.)
The same goes for women. It is common to see two females hold each other's hands while walking down the street (and again no sexual intention.)
Even though people are standing close to each other that does not mean it is all right to touch the opposite sex. So if you are a woman who is visiting China, then don't think people standing close and touching means they are friendly (especially the men).
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