Perhaps unscrupulous vendors in China have attempted to palm off fake, and probably inedible, eggs as the real thing from time to time. But claims about a well-organized and widespread fake egg market in China seem dubious. Of course, stories that seem too weird to be true sometimes do turn out to be based on fact after all. However, at least until more evidence is forthcoming, I'd be consuming this particular egg tale with a grain of salt.
The quote above comes from the following article:
Fake Eggs from China