This is... inaccurate.

There's no good way to explain this to anyone like they're 5, because no 5 year old can be expected to understand how two competing nations compete with regard to currency. But even a 5 year old ought to know that this is very incorrect.

The problem is that China has accumulated truckloads of foreign wealth by positioning itself as the world's best exporter. Cash is worthless on its own, so the Chinese government has invested its surpluses each year. That's wise, and to be expected.

Those investments have appreciated, and continue to appreciate, building a sort of imaginary Ft. Knox of value backing the Yuan.

The problem is that an appreciating Yuan drives up the prices of manufacturing (and all Chinese trade, domestic and international), undermining China's initial value-generating niche on the world stage.

If too many speculators pile on, and buy Yuan on the currency exchange markets, anticipating future growth (also wise and rational for them to do, given the laws of macroeconomics), China could find itself unable to maintain the price advantage.

If China loses the price advantage, China loses its economic engine.

Thus, the Chinese government has been artificially deflating the value of the Yuan relative to the US dollar (and by extension, relative to all world currencies tied to the dollar, which is nearly all of them), and then playing a little accounting game where they pretend that the huge stockpiles of wealth in their coffers aren't really Ft. Knox, but actually debt obligations sunk into US treasury bonds and other similar investments.

This of course is defying the laws of economics, which if left alone would push the value of Yuan through the roof commensurate with its "real" collateralized value.

Governments can artificially inflate or deflate markets, to a degree, but a bubble is a bubble and eventually every bubble will pop.

The rising Yuan of the past couple of years is not because of the actions of the Chinese government, it's happening in spite of their sincerest efforts to deflate the currency value.

Trends suggest this will continue.