China vs. USA

So, is it wrong for China to "cheat" by pegging their currency to the dolar?


Phase I - Artificial devaluation of Yuan, Maintaining Trade Imbalance
1-China exports more goods to the USA than the USA exports to China.
2-China gets revenue in USD and wants to convert it to Yuan
3-USA gets revenue in Yuan and wants to convert it to USD
4-More demand for Yuan than for USD because China has more revenue in USD than does usa in Yuan
5-This makes the price of the dollar relative to the Yuan fall. Yuan appreciates, Dollar depreciates in value.
6-****This makes the Chinese upset because when the dollar is weaker they know that the USA will buy less goods from them, therefore China does not want the USD to get weaker nor do they want theirs to get stronger. They want things to stay how they are. They want to have a trade surplus. China wants the US to have a trade deficit, so that the US will keep buying China's goods. China wants their producers to be able to produce things for less. China does not want to lose their price advantage.
7-What does China do to make it so that they can stay cozy in their current position? They artificially devalue their currency, (thereby increasing the value of the dollar). They print off Yuan and trade them for dollars. As China increases the value of the dollar (by trading dollars for printed Yuan) and decreases the value of the Yuan (by printing more Yuan), this makes it so China maintains its trade surplus, and the USA maintains its trade deficit. China avoids the equilibrium. 
Phase II - T-BONDS
8-Q:So what does China do with all of these dollars that they bought with Yuan that they printed to artificially devalue their currency? A:They buy treasury bonds from the US Government. (also reffered to as "t-bills" "t-notes" "t-bonds"; t-bills = less than a year, t-bonds=more than a year)
9-When China buys t-bonds with their dollars it creates more demand for t-bonds. What does more demand for t-bonds do ? drive up the price of t-bonds. Is this a good thing for the US gov't/USA? yes! This means that the US Gov't&/USA has to pay less interest to borrow money because so many people are now willing to lend it to them. Thus, debt in general in the USA is cheaper.