This raises some interesting questions. Although first, I would disagree with you that it is the new school itself who would want the release letter. It seems that with the new government regulations this year, they would need it in order to get you a new visa from the government. It seems that China has toughened up the regulations so teachers don't job hop. Of course, now all the power in the short term lies with the schools. And sure enough, I already know a couple cases where the schools now feel, "Now the teachers have to stay with us regardless of how we treat them, or we won't give them a release letter, and they can never work in China again".

I feel this new regulation and having to apply for your first visa from your native country, if they remain in place, will drive a lot of teachers away from China over the next few years . Of course, more people are coming to China due to lack of opportunities at home so it will be interesting to see the net result.

I do believe though that it is a myth that your visa is cancelled. I have known schools who have had crazy teachers take off and rued that they are still on the school's sponsored visa and there is nothing they can do about it. More a matter where it seems now extremely difficult to obtain a new visa unless your last employer grants you the newly coveted release letter.