The Chinese Central Bank purchases large quantities of dollar assets such as US Treasury Bills. This demand for dollars increases the value of the dollar compared to the Chinese yuan. If the Chinese sold its dollar assets and saved the money in China, the dollar would depreciate and the Chinese currency appreciate. Therefore, to maintain a weak exchange rate, the Chinese need to keep buying dollar assets. In order to make their goods more competitive, Asian currencies have been forced to devalue to a lower rate vs the US dollar than the yuan. It's basic economics.

The problem with a weak currency is it creates inflationary pressure. Since China is a big importer of commodities, a weaker exchange rate increases the cost of living and the cost of raw materials. As result, the Chinese Government has allowed a small appreciation in the exchange rate to help mitigate inflationary pressure. They have done this by trying to diversify away from the US dollar, but they still buy dollars.