This economy Stimulous for dummies...

We don't borrow money from the Chinese. WE borrow from the Federal Reserve System at their discount rate.

As far as I know, the money we will receive in May-Aug (whenever), is not taxable. Seems to me that taxing an economic stimulus payout would be counter-productive. So naturally, taxing it would make sense to the federal government.

We do. We sell T-bills to China and that money makes up the gap between what we tax and spend/consume and save.

http://www.epi.org/content.cfm/Issuebrief203