For university, I can see schools asking for masters degrees. If the Chinese want their schools not to be taken lightly, they need to increase their standards. My brother is the dean of recruiting at a university in California. He can tell you first hand all that is wrong with higher education here with the students he gets.
As to the teacher not getting her renewal, I do not feel sorry for her. She lied to get her job, and that lie caught up to her. If she was upfront with not having a degree, and then her r.p. was denied, I would have some sympathy.