For everyone's general information the yuan is still pegged, just not to the dollar. Its now pegged to a basket of currencies, including the dollar, euro, yen, ect. This allows for a little bit of flotation due to market flotations but due to the amount of currencies in the basket and the fact they they all float different directions, the result was only as slight revaluation of the yuan, it still mains vastly undervalued.

It is funny how picky the US is on who pegs their currencies. After Brentonwoods almost EVERYBODY pegged their currencies to the dollar, it was the basis of the world financial system. Since then, many countries have stopped doing that, adopting the currency basket approach or allowing their currencies to float "freely." Many economies still do, however, peg their currencies directly to the dollar.

The problem with China is that they are malicious about it. No one knows for certain how undervalued the yuan is, but conservative estimates rarely drop below 40%. Thats a lot, and makes their exports incredibly cheap. The problem is that they are deliberately manipulating the currency to keep that relationship.