What do you mean doesn't leave the system ? If I were to exchange yuan for USD at a currency exchange/bank, they would keep the yuan and give me USD. The yuan wouldn't get destroyed and lose value or leave the system. It would be either a) handed back to another guy who wants to buy yuans for USD or b) used for the profit/operations of the currency exchange.
BTC may for the time being move currencies without any perceptible loss in exchange value but the exchange value of BTC will go up per yuan with greater demand. The yuan will devalue against BTC but maybe this isn't a big problem because BTC isn't a major world currency .. yet ?
Yup you said it- it's not a major currency yet, so it's not "competition." ¥ -> BTC != ¥ -> $|€|£ etc. No manipulation of a central bank can effect BTC's value. Not only does yuan get "kept in the system" through govt-regulatable Chinese exchanges, it's not pegged to other nation's currencies, which China hates.
Remember Romney's line about "going after China for their illegal currency manipulations?" Heh.
BTC may for the time being move currencies without any perceptible loss in exchange value but the exchange value of BTC will go up per yuan with greater demand. The yuan will devalue against BTC but maybe this isn't a big problem because BTC isn't a major world currency .. yet ?