It's common everywhere

I believe this is common in most culture, no matter here or back in China. You probbly haven't worked in china, so didn't experience this kinda situation. In western world, ppl, no matter what their class or level, they will talking dirty jokes at relax. I've have enough of this kinda story. Just used to it. If you feel not comfortable, you can just smile and pretend to be enjoying. No need to behave too cocky.
Sometimes, we have to tell dirty jokes one by one. You can even learn some of your own. Entertaining others, entertaining yourself.