If you've ever wondered what people mean when they say that China is "manipulating" their currency, James Fallows has a nice explanation here. I'd just add that the fix implied is usually that China "manipulates" its currency somewhat differently so that the dollar is weaker against the yuan and American exports become cheaper while Chinese imports become more expensive. This would have the practical effect of generating more jobs for American workers (we'd make more stuff for export) but also increasing the prices of goods for American consumers. That may be good or it may be bad, but it's a tradeoff. A different Chinese exchange rate doesn't fix our economic problems, it just advantages some portions of our economy rather than others.
