Ah, something I can answer, nice! I'm going to paste this from a paper I wrote earlier, so forgive the somewhat academic tone.

So the Sa'ad ibn Abi Waqqas thing is according to Muslim traditions. According to Leslie, there is no historical record of this narrative. What it does suggest, however, is that contact began quite early on in Islam's history.

One problem of premodern sources is that it is impossible to pinpoint the Muslim population, as the terms used to describe the foreign populations were often indistinct. In the Tang period, the term used for foreigners from the West identified them as from either Dashi or Bosi (Persia), while the people were generally called Hu (an old term for barbarians) or fanke (literally, foreign or barbarian guests). Although ethnically many were doubtlessly Arabs or Persians, the labels could have included Turks, Jews, or other Central Asians as well. Religiously, Chinese sources mention Mazdeism, Nestorianism, and Manichaeism, but not Islam or Judaism. However, Muslims certainly existed in China during the Tang period, mostly in port cities, as evidenced by the presence of mosques and grave inscriptions.

Throughout the Tang and later Song, it seems that this foreign population in China w treated relatively benignly. They formed communities inside China, probably speaking Persian, but likely learned Chinese as well for trading and daily life. Legally, they were given the right to dress, eat, and pray as they pleased, although in the Tang period foreign males were sometimes discouraged from marrying Chinese women or adopting Chinese dress – an important marker of civility and Chinese identity since ancient times.

Sources:

Leslie, Donald Daniel. Islam in Traditional China: A Short History to 1800. Canberra: Canberra College of Advanced Education, 1986.

Lipman, Jonathan N. Familiar Strangers: A History of Muslims in Northwest China. Seattle: University of Washington Press, 1997.