Exodus 7:8 & 9

"The Lord said to Moses and Aaron, 'When Pharaoh says to you, "Perform a miracle," then say to Aaron, "Take your staff and throw it down before Pharaoh," and it will become a snake.'" NIV translation

God instructed them on how they were to present their authority to Pharaoh. He chose to make Aaron's staff a serpent but why? The actual Hebrew word is "tannin" and it means monster and, here, it is translated as serpent or snake. In other parts of the Bible, such as Isaiah and Ezekiel, it is translated as dragon. 

This is the opening battle in the war on Egypt's gods as they had "gods" for every form of life and function in life. In Egyptian mythology, their chief god was the sun god Ra and he was opposed by a large demonic snake named Apep. According to them, Apep and Ra battled nightly to see whether the sun would rise the next day or not. By making the staff a monster snake, God was putting Pharaoh on notice that the Egyptian gods were going down.

So, God would create a demon? The short answer is yes as He created Satan and the other fallen angels which are called demons. But, in this case, it is not actually a demon but will be used to show Pharaoh that the God of Israel is greater than the demon forces they were afraid of. It can also be a reminder to us that God is far greater than Satan and He is in control.