Well here's the thing: They did operate kind of like western titles. In the Zhou dynasty (1046BCE - 256BCE), there were a number of ranks below 'King' (wang) and Prince (wangzi). Dukes or gong were usually related to members of the sovereign family, or were individuals whose contributions to the kingdom were sufficiently outstanding to warrant a royal 'adoption' of sorts into the royal family, where they could then be enfeoffed as a duke, with or without land, but they were usually granted Duchies in the heartlands of the kingdom. Below duke was the marquis or hou. Same story as with the dukes: They held connections to the king but instead of being given lands central to the kingdom, they would usually be granted territories on the outer fringes, similar to march lords in Europe. Below marquis was the count or bo, then viscount (zi) which coincidentally was also the word used to describe a master (like Kongzi: Master Kong... Confucius). Finally, there was the count, nan. It wasn't until Qin Wang Zheng or King of Qin united China to become Qin Shi Huang that the newly formulated term huangdi came to symbolize the emperor - the supreme ruler of all kings and peoples of Imperial China, under heaven. This is the basic premise of Chinese peerages, and its usage and titles remained largely intact through to the Ming dynasty (1368CE - 1644CE) as the Qing dynasty had a fiendishly complicated system for peers, royals, and the inheritance of titles associated with those individuals (although titles used were still largely the same, as in Dukes were still gong, etc). Inheritance was also pretty similar, in that peerages were just passed down from father to son (son of main consort or wife that is. Concubines' children were usually out of the running). One quick example of this usage is for Li Yuan, the man who would found the Tang dynasty. Before he rebelled against the Sui, he was the Duke of Tang, or Tang Gong. Before him, his father had also held the title of Duke of Tang. I'm not too familiar with how the Qing dynasty system worked, but I do know that peerages could degrade (like from a Duke to a viscount) over successive generations, that inheritance wasn't always guaranteed, and that even some princely titles couldn't be inherited without degradation which is strange from a European perspective. Some peerages were also limited in their ability to be handed down, and could only be inherited for a set number of generations. Throughout the history of Imperial China, there was also a way of granting ranks and titles to Imperial consorts and concubines, so there's that.

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During the high and late empire from Tang to Qing, there was also a courtesy system in place to award special titles and grant special ennoblement. For instance, the male head of the Confucius family was granted the title Duke Yangsheng during the Northern Song dynasty, and to this day his descendants carry a vestige of that ducal title, or when the Yuan dynasty deposed the Song in 1279, the Mongols granted the title Duke of Ying (Ying Guo Gong) to Emperor Gong of Song. The Ming dynasty also had a pretty complex system of granting titles to officials who had provided diligent and long terms of service to the Imperial court. A paper regarding that can be found here, if you really want to read it.

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On another note, the power of nobles was diminished relatively quickly in Chinese society. By the Sui dynasty (581CE - 618CE), the bureaucracy of China was largely merit based and everyone regardless of birth needed to be literate and well-read on Chinese philosophy to aspire to hold high levels of political office, so politically, Chinese peers have had a much more limited role in history when compared to European nobles (to vastly oversimplify things).