Many foreign teachers once stated unhappily that "many students expect foreign teachers to be singing dancing game-playing clown entertainers." While it is true that a teacher is not a clown and should be recognized as a teacher, there is a wee bit of merit to the "singing dancing game-playing clown entertainer" approach. It has merit because in the class of such a teacher, students will be relaxed and uninhibited. The problem is that they will usually feel no need to speak much or take the initiative for their own language development. They're merely a member of the audience in the clown's show.
That said, there are ways to create a relaxed atmosphere in a way that actually promotes your goals of teaching the students something.
First, to be comfortable in class, the students need to be comfortable with you as a person. The most natural way to foster this feeling is to begin your first class with a long, friendly introduction. Tell your students plenty about yourself and your experiences in the unknown expanse outside of China. They'll be interested. Don't forget to leave time at the end for their questions. They have them, even if they're shy about them. A few students might boldly ask immediately (maybe even interrupting you). A few might ask during the time you allow for questions after you're done speaking. Many will need encouragement and time to collect their thoughts after you've finished talking, even if you've already told them you expect them to ask questions. The most timid students might even require you to have them write the questions down and hand them in. (Don't worry, it's a bit unrealistic to expect to cure them of this intense shyness in the first class.) In any case, presenting yourself in the first class as a warm, interesting person open to their questions will go a long way. Don't forget to maintain this demeanor, though. Some people find it comfortable to slip into the "stern disciplinarian" role, but you'll find your task of making the students talk much more difficult if you do this.
Second, a sense of humor in the classroom goes a long way. This might even be the single easiest way to create a relaxed atmosphere. A teacher that jokes with the students will find the students much more responsive. Of course, puns and knock-knock jokes (which don't exist in Chinese and are surprisingly hard to explain, much less get to produce laughs) are not the way to go. It won't take you long to learn how to "adapt your sense of humor" for your Chinese classes. Keep class interesting.
Third, don't overcorrect your students' spoken English. Yes, your job is to improve your students' spoken English, but don't think that means perfecting every sentence they utter. Improving your students' spoken English also means giving them ample opportunity to practice it in class, as well as boosting their confidence in their spoken ability. Overcorrection can be counterproductive. It's better to err on the side of too little correction. If this happens, your students may even communicate to you that they'd like to be corrected more. On the other hand, if you overcorrect, your students will probably just silently harbor their "my spoken English is very poor" complex and speak much less in class.
Finally, using games, songs, movies, etc. in class as educational exercises will help students loosen up. Try not to overdo it, however, or you may find yourself in the clown role and your students a very demanding audience.
