China has a widely-quoted 10%+ annual growth rate, and a weak currency. Lots of exports. What's not so widely reported is that they also have something like a 40% default rate on loans -- it's all a house of cards. Growth is easy when borrowing is cheap and easy, but they're suffering now because of the increasing prices of imports used for raw materials.
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A weaker currency increases exports. Temporarily. China keeps their currency suppressed because they need the inflow of cash to keep their banking system from collapsing (due to the 40% loan default rate). They are in a deep hole that's going to be very difficult to climb out of.
China's artificially weak currency is a big issue. The reason the Chinese are being pressured to float their currency is because its artificial weakness substantially distorts the market, and causes people to make decisions that they wouldn't otherwise make.
Even today, it's still considered a smart business move to close down US-based manufacturing and move it to China. If people really understood how the economic situation is badly distorted and how fragile the Chinese banking system is, they would definitely think twice (which is why the banking aspect is close to being a Chinese state secret).
The press seem to be focused on the problems from the short-term perspective of US businesses, which is why they emphasize prices. Long-term, if the US wants to "win" against Chinese imports, one could argue that we should let them continue to abuse themselves. The problem is that they are also abusing the rest of us in the process.
Of course the Chinese aren't the only ones playing the distortion game. For example the US government distorts many widely-published statistics that are relied on by many to guide investments, timing, etc -- things like the CPI, GDP, unemployment (did you know that real unemployment in the US is around 12%, real inflation is around 10% and that we are already in a recession?).
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