Below is a great clip from PBS Newshour (US indepenedent broadcaster) with Paul Solman. It explains very well how China accumulates and fixes its currency, the Renminbi*, to the US$. Basically at 9.15am the Peoples Bank of China (Central Bank) and the SAFE (State Administration for Foreign Exchange) issues a circular to all the trading banks stating that this is the exchange of the Renminbi to the US$ for today. When companies sell goods overseas the US$ etc that they acquire are then exchanged for Renminbi with the Central Bank – therefore the Central Bank accumulates significant amounts of US$. The site below has many more really good video clips
PBS Newshour – Making Sense with Paul Solman
*Renminbi, loosely translated as the people’s notes, is the official name of China’s currency. Yuan is the unit of account.