Translation:Teacher Li is Chinese.
President Obama, Senator Warren, Professor Tarsky, Doctor House, Commissioner Tark, General Eisenhower, Nurse Tucker, Officer Johnsons. You think it sounds weird because you've never heard of it before, but it's not unenglish by any means. And i suppose Master Wu and Sifu Lao used to be weird too, but a modern English speaking person wouldn't bat an eye at those two.
No English-speaking country uses "teacher" as a title. Chinese don't understand this because "teacher" is a title in Chinese. I think the course contributors naturally assumed that it must be true in every other country.
Now you know the Chinese call Mr. Lee "Teacher Lee" if he is a teacher.
Cool story, maybe this cloze will be a valid English cloze along with those listed clozes some day but right now it isn't.
It doesn't matter whether you find it logical or not; a language is more than its symbols arranged in syntactically senisble order.
There is a set of titles recognized by English speakers and that is not one of them. If native Chinese speakers actually say this in English then they're speaking a pidgin dialect.