Many universities can offer replacement copies of your diploma these days; for a cost that is roughly the equivalent of $50 USD; if you are a younger graduate you may wish to enquire with your university about this. This service is usually intended for the likes of people who lose their diploma in accidents such as house fires etc. However, the embassy is a good bet for taking action; the government doesn't like being hassled by any embassy due to the actions of such a small company and will probably make sure that that particular company pays dearly. After all, keeping your documents, would be theft.

China is increasingly becomingly one of the less attractive places to work. The economy is buggered and there's no longer any kind of sense of optimism in the air. I'd suggest that you only work here if you get offered mega money or have Chinese family members or other such interests here. Some of us are only us here, because we have been here for so long that we'd be sad to leave or have a lot to deal with when making the move back; many people who've got married and had kids tend to be timing their moves to coincide with their child starting at primary school.