I believe giving gifts to the teacher is a cultural expectation with the Chinese students. It seems to be an accepted practice in most oriental cultures.
However, that doesn't mean you have to follow their customs. It is nice, if you and your son wish to give a gift of appreciation to the teacher. However some of the most appreciated gifts are not those we go out and spend a bunch of money on, but rather those little gifts that show we put our hearts into the giving. At age seven, your son may like to make a card and a small gift for his teacher. Think about something he likes to do in the way of a craft that might make an appropriate gift. Or make a batch of cookies together and let him wrap a few of them nicely for his teacher. Most teachers love to get a small gift that's presented by the child with the words "my mommy helped me make this for you". Or perhaps the words would be "I made this myself!" (even if mom did most of the making, the child still has the pride of having made it "myself")