Generally, sierra, a contract in China won't really protect you; it's only there to protect them. However, a contract from an illegal school is useless to all concerned. Nevertheless, you seem to be in what could become a fairly dangerous situation. My advice would be to leave as quickly as possible. Normally, I wouldn't advise such a thing (although, personally, I have a standard that I go by: "one lie, goodbye."), but yours seems like a pretty dire situation. Your visa may not be legal, your employer is a shark and, worst of all, winter is fast approaching and that could make things even worse - at least from my perspective.

Don't worry about being black listed. How can an illegal school blacklist you? If the other school that wants to hire you is sincere and if they are a legitimately licensed to hire foreign teachers, they will do what they can to bring you back. Meanwhile, though, "get while the gettins good." Don't worry, Sierra, yours is unfortunately not an uncommon tale. Eventually, you'll find a job that suits you. Some lessons are harder to learn than others, but you can learn from this one.

Again, get out of there as quickly as possible. Meanwhile, solidify your relationships with those you know you can trust. Also, if you find yourself needing help from the authorities, make it clear to them that you are seeking their guidance and their help. But be careful, they very well may be in cahoots with your employers. Play it cool.