That is not exactly correct. I have known, and still know some teachers who are working legally without a degree in China. That is to say the public middle schools and high schools they work for obtained legal visas for them. You should say that working on a tourist (L) visa is illegal in China, because, YES, that really is illegal, the degree issue is still a grey area. Most universities in China require a degree these days. Those that don't have one just get a fake one. Nobody cares in China, many Chinese people also have fake degrees.