Its more complicated than that, i feel so stupid now...
This guy deposited money to my account, and i have that money now, he wants me to deposit it to china somwhere however this is clearly illegal and i dont want any part of it.
I dont know what to do
Asking an online forum might not be the right thing to do.
When you have the suspicion someone tricked you into some money laundering go to the police and represent what happened.
This is an Upwork matter, a PayPal matter, and a bank matter.
Don't go to the police. This has nothing to do with your local police.
Keep in mind that you participated in fraudulent activity. Are there other people involved? Yes. But the scammers don't even live in your countries. So if you pressure the police to get involved, all they can do is investigate and possibly prosecute you. They can't do anything about people living in another country.
As others have already pointed out it's against Upwork ToS to accept payments outside of the platform. You should always make sure you have an active contract before you start doing any work for the client and don't share any personal information with them.
Whatever you do, do NOT send any money from your bank account to somebody.
I think what could happen is you would send REAL money from your bank account to somebody.
And then the PayPal payment you received could be clawed back by PayPal. So you won't have that, and you will have lost hundreds of dollars from your account.
I strongly urge you to COMPLETELY stop communicating with the scammers. Block them on whatever communications channels you have been using.
Talk to PayPal and your bank about your concerns.
Every time I receive one of those spam emails telling me I've won 10 million dollars from some obscure lottery, or that a king needs to transfer his money to a bank in my country, I think to myself "is anyone so dumb to fall for this stuff?"
Then I see these threads and I lose hope in humanity.