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Geithner on Yuan: Misstep or Warning Shot?

Firstly, the US isn't even China's biggest export market anymore, a huge part of Chinese exports would be substitued by imports from other parts of the US should a Yuan-rise make it less competetive.
Secondly, as the US is only one of China's export markets they may decide to lose exports to potential protectionism instead of risking losing market share in all markets due to an appreciation.
Thirdly, and most importantly, does anyone in America have an idea how a forced appreciation of the yuan would look like to Chinese people? The Chinese have somewhat of a chip on their shoulder, as the British would say, when it comes to matters involving national sovereignity, so to see their government more or less follow on US-order would lead to hefty riots against the government. Maybe someone should tell Geithner of the Chinese concept of 'losing face'.

I'll round this up with the prospect of the Chinese firing a warning shot at America by sitting out UK bond auctions. Diplomacy 101.

Geithner on Yuan: Misstep or Warning Shot?

US-China relationship is the most important in the world so any side should try to avoid making truly stupid moves, legislative measures would fall under that category.
In my opinion you read too much into it as you read the quote too often, what happens to the yuan will be decided on the ground and frankly, it could go either way.