Go and speak to someone you know at PSB.. he  cant clain the visa money as you worked for him...... you should take him on on the fact that he didnt keep to the contract.... or...lie to him also, so you need to go home urgent will be back and just move on

I'm going to suggest something that could get wiped, or flamed, or otherwise give me thumbs down...

If I was in that situation, I'd pay someone to break his legs. Or something similar. Or, of course, do it yourself - next time he throws a tantrum, deck him. Then walk out. Other alternatives include messing with his car...

He obviously thinks he's immune to any form of consequence, that he can get away with anything. People like that need to be brought down a few pegs.

Obviously, the situation is dependent and it's your call. He may have his own connections and all, and things could end up worse.... or not!

On a more legal note, you can bet your life that he's diddling the books, and isn't paying his taxes. One phonecall could change all that... If his company is 'illegal', then there's NO WAY he's getting any money off you for 'breach of contract'... your contract doesn't have any validity.

Be careful though... in all likelihood, you are working there illegally. Find another job, with another employer who is legit (there or another city), and get out - FAST!

 
On a related note, but obviously far too late for your situation, I let my employers know fairly early that I'm not only interested in kung fu, but have also learnt. In my last job, the office staff would sometimes see me train, using staff, sword and nunchuks... they tend not to harrass too much after seeing that (ftr, I'm actually crap at it, but they dont' know that... hehehe).

Is it possible to just keep working and smiling until you get another job, then leave? Maybe that would have more impact. I think his claim for money is a bluff, if he is illegal as you say.

Try to find somewhere that is legal to work. The language schools and agents in Chengdu are really bad, even by Chinese standards.

If he's illegal then he should have no protection from the law. If you leave and he goes to the cops or whoever they'll bust him. He can't sue a worker who wasn't technically working for a business. Go out like a boss and make him lose face in front of all the other employees. 

Very simple. Find another job! When you have the other job, just leave your current company. You may lose benefits: Airfare ands such, but you will end up in a better situation!
Good Luck!

I think you have several problems here. One is that your company is illegal which makes you an illegal worker there. Another is your visa. From what you said here I assume that you have a work visa. Since you're company is not legal, it means that your boss paid a visa agency and got you a visa on a black market. This is also the reason why he wants you to to pay him 9000.00 RMB since this is not a regular visa price - it's much cheaper. This was probably the amount he had to pay to the visa agency. How can you check who your formal employer is? Simple - you have it in the work book or in your foreign expert certificate if you're officially on a teacher's work visa. I also assume that your boss has never given you that - he knows that something like that could bring him trouble. I assume you only have a visa in your passport and that could be a problem if you want to change your job. If I were you, I would check what my official position is (it says in the workbook) and who I officially work for.
First, you need an official release letter from the company you work for (the company you officially work for, not the illegal one) which says that you don't work there anymore. Next, you need a reference letter from the same company. Before that, you also need to find a new job, of course. When you have all these things, you're good to go. 
You should prepare the official release letter in Chinese my yourself as well as the reference letter so the visa agency could help you and certify them. Your priority should be in finding out who your official employer is, because your company obviously isn't. Good luck!

First of all thank you for all the advice and help! It is really appreciated.

To give you an update on my position--My Foreign Expert's Certificate says I work for a furniture company in International Sales, my contract (which is only in English) says I work as an Educational Consultant (which is what I technically am doing). But the contract is not a legal one, for sure.

I have two other job offers on the table that have better pay, hours, benefits and a clearer, legal contract.

Here is my plan: I get paid next Thursday, and then I maybe an hour or so after collecting my pay I am going to resign according to company rules (one month notice). My guess is the boss will throw a fit and demand I compensate. If he does, I plan on just walking out and arranging the release letter myself.

Do you have a work permit?

What is it registered to?

This is the #1 most important thing.  Is it "registered" to the school you're at currently?

The problem you will run into is that even if you do the right thing and report the bad man, YOU were still working illegally in China.  Even if it's "ot your fault".  You will be asked to leave per what's on the law books.  And fined 1000rmb.  This won't stop you from coming right back, but you will have to leave China.

Your best bet, honestly, is to start the process with another company RIGHT NOW.  Don't quit until you have your new work visa and your new permit is in process.  A requirement of getting a new residence permit is to turn in your old one and they might ask for a letter saying that you no longer work for that company.  Ask one of your coworkers on yor side to make it and hopefully they can get a hold of the company chop.

If your boss does try to go to the PSB just to be an ass, well, he'll get fined, you'll get fined, and you'll be asked to leave China.  Unless you know some REALLY WELL CONNECTED people at the PSB.  But even then, be prepared to get a plane ticket.

Sucky situation, I hope it ends well for you.

Contracts in China arnt worth "£$%^% They are not worth the paper they are printed on  Just leave when you get paid one month they cant do anything  ...I did that with a company and got a job the same day with another not a problem

Having worked in China 3 times, I would bet my reputation that the safest bet is to leave on the 10th or 15th, or whenever your pay day is.
If he's that crooked, then what assurance do you have that he'll honor his part of the contract at the end, with regard to airfare etc.
At the end of the day, there are many places in China that won't care about your letter of release or letter of recommendation.
It's not like they check these things up when you leave the country, the only thing you need to worry about is overstaying your Residence permit, or getting it cancelled.
At the end of the day, not all employers who aren't too bothered about release and recommendation letters are bad.
I had a decent employer who I worked for for 4 months on an F Visa, and that was a Middle School.
I think the only places you'd struggle to get work would be Universities.
Leaving after pay day is a safe option. That get's my vote.

The game is yours; you can run off any time; don't believe any threats; and finally, have a look at this:

There's a government for each province in China; if you break a Z Visa the government of the province you work in will take note and may refuse you another work related VISA in the next years (but you can still try, nothing's sure). But Visa for studies should be fine (X Visa).
In terms of work, the school you worked for will take revenge, not letting you use your Foreign Expert Certificate for another Z Visa job, so you might not be able to get another Z Visa in the near future anywhere in China, although eventually things will sort out one way or another; like you can get a job on a Business VISA or let your new employer put pressure on your old school for them to eventually release your Foreign Exp Cert to them.
I even heard that a whole new Foreign Expert Certificate can be made, but that depends on the local government and how good the schools’ relations with that local gov are.
Take note that there are 2 kinds of Certs in China: Foreign Exp Certificate for all education related jobs, and Scientific Expert Cert (not sure the exact name) for other jobs.
Worth knowing that you’ll probably never see your cert; it’s the property of your employer, who passes it on to your next employer.
The Foreign Exp Cert has an expiry date on it, but even after expiration you still need a release from the last employer who has it to get your next Z Visa job.
In the end, it’s just loads of red tape (bureaucracy); and where employers and governments like you and get along well together things become very easy.
However when you break a contract you burn bridges, make relationships bad, and that’s what you don’t want in China.
If you break a Z Visa contract, change province, and eventually start working on a Business VISA that doesn’t tie you down, cos F Visas (business) can be broken without future consequences I think.
However, regarding the Chinese gov and it's VISA Bureau the F Visa is not proven work experience, because F Visa is not official employment; only Z Visa is.

take the money and leave , he can do nothing .

The big question here is: are you planning to stay in China? My situation was something like your and I did something akin to the grab-and-go method (I was pushed to it and still feel bad for the staff I left behind) and it was no hassle whatsoever to get out.

If you want to leave China, just do it. Easy. If you want, then listen to Vladimir, and also accept there's a good chance you'll have to leave the country anyway and then come back.

  Yeh, personal posts of this nature should be filed by the cat (you listening, Cat?), and then deleted after a couple of weeks.

  It was posted 40 weeks ago. My guess is he's sorted out his problem by now. My advice in matters such as this remains the same: take a dump on his desk and steal all the selotape.