Sun Li knew the answer to the enigma that was your combat style, and crushes you with it. He also counted on his skills as a teacher to make the flaw so incredibly subtle that, in the inevitable battles to come, others would be unable to capitalize on it. The opening would be his, and his alone, to take advantage of. Its never explained in detail, its basically a very minute flaw that only Li can take advantage of (since he designed it) others may notice something wrong with your style but never truly figure it out.
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When you finish Mooshu and is about to heal the injured Emperor, the Jade Oni will step in your path. You need to defeat him, and then you can accept the Jade Champion's quest later on. When you want to re-fight the Jade Oni, just enter the Emperor's Palace and turn on the Obelisk, it will summon the Jade Oni.
Jade Jade Glass Jadeite Jasper Jaspereyed Wood Jet Job's Tears
Jade, jasmine
To find Jade, you need to get your Metal Detector(4th item on the menu at the top right of the screen) out and search in Cutopia.
In heart gold after catching Kyogre you will have the Blue orb. Get someone to trade you a groudon only then you can get the jade orb and catch raquazza