Yes, Chinese people learning English are obsessed with vocabulary. It's instilled into them that a broad vocabulary is the secret to learning English, to the point that kids are learning English words that they don't even use the Chinese equivalent of yet.
They are very impressed with the classics for the same reason that many Westerners are: they look prestigious. If you want something contemporary, you'd probably have to choose something that has won an award in order to get it approved by whomever. You could try
The Blind Assassin by Margaret Atwood (Booker Prize),
Snow Falling on Cedars by David Guterson (PEN/Faulkner), or
Bel Canto by Ann Patchett (PEN/Faulkner and Orange Prize). I really can't remember how much sex is in those books, though, as I'm pretty immune to it. But, if you're choosing PEN/Faulkner winners, stay away from Philip Roth because of the sex issue.
You may want to check out the Orange Prize (small discussion
here). It's an award specifically for female writers, so the books may appeal to your students.