Conceivably they could sue you, but doing so from China wouldn't be worth their time or expense. On the other hand, once you sign the contract and they get the paperwork rolling, if they get the invitation letter issued and/or the Foreign Expert Certificate issued (i.e. they spend some RMB on the paperwork), they're not going to be happy campers and have a few tools in their arsenal to get back at you. Not sure about Letters of Invitation (that's under the Chinese Embassy system), but I do know you can only have one Foreign Expert Certificate issued in your name and that's logged into the FEB system nationwide. If any other place tried to get you an FEC, they would be blocked from doing so until the original employer released it. At that point they might hold it for ransom.
Also, they could report you to SAFEA which DOES have a blacklist. I've seen it. There aren't too many names on the list last time I looked, but it is there. It's on SAFEA's Chinese language website, not the English version. [size=78%]It's available to govt. schools and bureaus to consult if they so choose. My impression is not many do. Also, your name goes on the list only if the school reports you. Again, my impression is not many bother to do so, but if they're pissed off enough about what you did, they might.[/size]