China's currency has been pegged to the USD for some time now. This is actually a common arrangement. A currency peg is basically a commitment by a government to keep its exchange rate with another country at a certain value, mostly to aid exports. It does this by buying and selling currencies, usually leveraging very large reserves.
There are several reasons why the past few Admin. have tolerated the currency peg. A cheaper Yuan means that US consumers get better prices. Also, China buys a lot of Treasuries as part of their sovereign wealth fund. It's still a bitter pill to swallow if you're a US manufacturer or exporter, though. The currency peg also puts downward pressure on real wages for Chinese workers, since it devalues the currency in which they get paid.
What happened in the past few days was that the Chinese central bank decided to push the value of the currency down even further, prompting a symbolic US response.