Private tutoring firm settles with Beijing graduate for 30,000 yuan in what is thought to be first case of its kind in country

When recruiters said they could not hire her because they needed a man, Cao Ju got angry. Then she got a lawyer.

Now the company has settled with the young Beijing graduate for 30,000 yuan (£2,985), in what is believed to be China's first gender discrimination lawsuit.

"I really needed a job to pay off my loan; I wanted this job; I was a bit angry … I think as long as the person is capable of doing the work the post requires, gender is irrelevant," said Cao, 23, explaining why she brought the case.

Although her response was unusual, her problem was not. More than 90% of female students surveyed by the All-China Women's Federation in 2011 believed they had experienced gender discrimination by employers.

"Although we have a law to ensure women enjoy the same right as men to obtain jobs in reality you can see many companies write 'women not wanted' openly and brazenly in job adverts. It is very strange. No government department supervises it and no government department punishes them," said Cao's lawyer, Huang Yizhi.

It is a striking contrast with the Communist party's historic promotion of gender equality and high rates of female employment in China. There are high-profile success stories in business, such the as property entrepreneur Zhang Xin. The government has lauded the country's first female astronauts and army special operatives – even if state media focus as much on the looks of female pioneers as their skills and toughness. In the Mao era, officials promoted the involvement of women in the public sphere, prompting more to take up "men's work". But after came "a real backlash against this notion that women and men were equal and that women could do what men could", said an expert on gender in China at the Australian National University, Tamara Jacka.

While some hoped the development of a market economy might reduce discrimination, Jacka added, "the areas that are expanding the most and are the most marketised are the ones with the greatest inequalities". One study of urban employees showed women's wages as a proportion of men's falling from 84% to 74% between 1995 and 2007.

Jacka said: "Women are just not getting the better paid jobs, both because they are concentrated in industries that are dominated by women and poorly paid, and also because within individual workplaces they are not being promoted."

State news agency Xinhua has warned that a relaxation of the country's strict family planning laws could exacerbate discrimination, making employers more reluctant to hire women lest they take maternity leave more than once.

In Cao's case, which was settled last month, the Beijing-based Juren Academy – a private tutoring firm – specified that it wanted a man for the post of executive assistant and rejected her because she was a woman when she applied nonetheless. It said a man was needed as the work would include physical tasks such as changing the bottle on a water dispenser.

But challenges do not end when women enter the workplace, she noted: "They might be excluded from certain positions, or experience sexual harassment, or not be able to get pregnant [because they fear dismissal]."

A survey of female factory workers by a labour rights group in Guangzhou last year found up to 70% had been sexually harassed; 15% said the problem was so serious they left their job.

"The management system … does not consider women's working conditions, because management lacks female leaders," said Hong Mei of the Sunflower Women's Workers Centre, which carried out the survey. "Female workers themselves do not pay enough attention to these issues and they don't get enough attention in society, either."

Many of the obstacles Chinese women face in seeking fairer treatment are familiar, such as fear of damaging future job prospects. Cao is using a pseudonym. But the opportunities for collective action are much more limited than elsewhere, although grassroots NGO Yirenping arranged Cao's legal help and other women pressed the court to hear her case. Independent trade unions are banned and other forms of organisation tightly controlled.

Huang noted that while Chinese law states women are entitled to equality – the basis of Cao's claim – there is no detail on officials' responsibilities or means of enforcement. In practice, authorities have done little to tackle discrimination. The Ministry of Education has defended universities that require lower test scores from male than female applicants.

In Cao's case, local authorities told her there was no discrimination case as the academy changed the recruitment notice after her complaint. Her subsequent lawsuit ended in a settlement, not a court decision, and Chinese law does not work on precedent. But Huang is optimistic that courts will take it as a reference point and that it will inspire other women. Cao acknowledges that companies may learn to be more subtle, rather than less prejudiced, but hopes the case will help to change attitudes.

Operators at the Juren Academy refused to transfer the Guardian's calls, but its CEO has described the payment to Cao as a special fund for caring for women's equal employment, rather than compensation. He told Chinese media his school had never discriminated against women and employed mostly female staff, but urgently needed a male employee because physical tasks required more than one woman.

Rights advocates say significant progress will require new sex discrimination legislation and a government contribution to maternity leave costs, currently borne by employers. Cao said: "Women need to improve their awareness of their rights and to be more independent."

Additional research by Cecily Huang