The administration is wrong. Of course China is manipulating its currency and has been doing so for most of the last decade. Now, the artifice is beginning to unravel with domestic inflation and mild currency revaluation.
So what? Well, the mercantilists in the Obama and Bush administrations were concerned that China was trumping the Bush/Obama beggar-thy-neighbor dollar-depreciation campaigns by keeping its currency low. It's sheer envy for China's ability to escape economic reality for so long.
By the way, since I talk all of the time about inexorable economic laws, how has China been able to seemingly suspend economic law? It's simple: super-saving Chinese citizens aren't paid the going market rate for their savings in state-owned banks.