My husband usually carries a small pocket knife. Will he need to check it when going through security on domestice flights in China?

Most likely yes. The Chinese authorities are very serious with carryon security.

put it in your suitcase

Yes, put the knife in checked luggage.

At the small mountain airport near Juizhaigou, I got stopped with my carry-on suitcase going through security. I had completely forgotten the "leatherman" tool I'd brought with me but never used, which includes a small knife among other things. The security personnel were very polite, and managed to communicate to me that there was something in my bag. When I dug it out of the bottom of my bag, they nodded and requested that I check the bag in. It all went very smoothly, but I wish I'd remembered it before trying to do carry-on!

I ran into the exact same issue at the Guilin airport. I had forgotten about my leatherman tool in my carry on backpack and it was immediately taken away at security. It's always better to be on the safe side and check in anything that could be considered dangerous.