It is important to distinguish between "understanding Chinese" and "knowing what it's like to understand Chinese". We immediately have a problem: knowing what it's like to understand Chinese involves various qualia, none of which is unique to Chinese speakers.
So I'll simplify the argument. Instead of having a room with a book containing rules about Chinese, and a person inside who doesn't Chinese, we have a room, with some coloured filters, and a person who can't see any colours at all (i.e. who has achromatopsia). Such people (e.g. http://www.achromatopsia.info/knut-nordby-achromatopsia-p/) will confirm they have no idea what it's like to see colours. If you shove a sheet of coloured paper under the door, the person in the room will place the different filters on top of the sheet in turn, and by seeing how dark the paper then looks, be able to determine its colour, which he'll write on the paper, and pass it back to the person outside. The person outside thinks the person inside can distinguish colours, but the person inside will confirm that not only can he not, but he doesn't even know what it's like. Nothing else in the room is obviously conscious.
A propos of the dog, this is the other minds problem. It's entirely possible that I'm the only conscious being in the universe and everyone else (and their pets) are zombies. But we think that people, dogs, etc. are conscious because they are similar to us in important ways. Kurzweil presumably considers computers to be conscious too. Computers can be intelligent, and maybe in a few years or decades will be able to pass themselves off over the Internet as Chinese speakers, but there's no reason to believe computers have qualia (i.e. know what anything is like), and given the above argument, every reason to believe that they don't.