If this happens to you, you have no other choice but to sue them. As a foreigner, you have this option and you will win. It is illegal not to allow you to move on once your contract is completed and there are Chinese laws (believe it or not) that protect you; they are just pushing your buttons because they can. I know of a few that have sued and have won their release.... just depends on weather or not you really need to stay in China.
Remember that China is 30 years behind developed countries and their business practices are derived from communism; trying to control you is what they are use to. So, just take them to court and slowly they will realize that foreigners will not put up with their crap.