Despite the differences in circumstances, there similarities bear watching. China is tempting the Fed to delaying lifting-off for as long as it likes. Deflationary pressures from China will persist as long as the Yuan is under pressure and the Dollar is rising—regardless of what the Fed chooses to do, there will be deflation.
Even before the Yuan began its revaluation, the Fed was up against significant policy headwinds from other large trading partners—Europe and Japan are both undergoing large-scale easing. China is only playing catch-up with its currency moves. It was only natural for China to join the fray, and the Yuan has depreciated far less than the Euro or Yen did last year. Regardless of the high visibility of the devaluation of the Yuan, it should be thought of in a much broader context of a global race to the bottom.