China causing Currency War Recently there have been reports of China devaluating its currency against the U.S Dollar. I'm a layman and I am unable to understand the need for a country  devaluating  it's own currency. How would it help that country? Moreover newspapers report that this move by China could result in a currency war. So what exactly is a currency war? Please try to keep it simple, as I'm a layman in the field of economics.
Okay, in layman's words, devaluing yuan (against USD) means, Chinese made goods are cheaper in USD. On the other hand, American made goods are expensive in China as a result. China wants to keep its export competitiveness and may want to keep its 'world's factory' status. Well, South Korea may as well want to use a similar strategy to make domestically produced export goods competitive, similarly, other aisan governments considering devaluing their currencies. There would then be a currency war... hope this is as simple as you wanted to see.