At this point in the global economic cycle, many countries are seeking a more competitive exchange rate. However, when all countries want a weaker exchange rate, it becomes difficult to please everyone.
Most focus has centred on the value of the dollar / Yuan. The IMF state (link) that the Chinese Yuan is undervalued compared to the US dollar. Economists such as Paul Krugman, argue that this undervaluation of the Yuan means a loss of jobs and output in the US.
If China stopped buying so many US Treasuries, the dollar would weaken making US exports more competitive and help the stagnant recovery. However, China is resisting pressure to allow Yuan to appreciate because it is following a policy of boosting exports and growth.
It can be argued this policy of a weak Yuan is in danger of overheating the Chinese economy. The strong demand for exports is encouraging speculative investment. Also, the unsterilized foreign currency holdings (link) and strong export demand are in danger of boosting Chinese inflation.
However, on the other hand, the US consumer is benefiting from cheaper Chinese goods which is increasing their living standards. This increases their disposable income to spend on other goods.
China's intervention has led to foreign currency reserves of $2.6 trillion - the highest in the world. This accumulation of foreign currency reserves is a mirror of the recurring Chinese current account surplus.
The irony is that China has been one of the best buyers of US Treasuries helping to finance the US deficit. The other irony is that China holds so many dollar assets it has a vested interest in the value of the dollar. Tentatively it has started to diversify (such as buying Yen this year). However, the Chinese Yuan is only pegged against the US dollar. Whilst they maintain this dollar peg, there will always be a need to buy dollar assets.