Even if China links its currency to the dollar, how can it avoid raising prices if the cost of its raw materials, like oil, keeps going up?
It can't, but NO ONE can. It's a world commodity. The difference is our suppliers - like China - aren't inflating prices simply because their currency increased. Any inflation we're seeing is from commodity prices increasing, not just financial markets jiggering about.
In the EU, it's the opposite - they can get the commodities for "less" than we pay (less of an increase), but they cannot pass those savings along since most of the cost of what they export is from labor and capital costs, no commodity items.
That difference is what's killing the EU, and why a weak dollar versus the Euro doesn't make much of a difference for the US and its trade allies.