Who is 'They"? I'm not sure who your talking about but it seems like many people have insults of other countries it's not just China. In the news the President of one of the schools in China insulted all of the presidents of the United States and it's education.

I guess it's to save face. They think that if you insult them, others will think they are weak. They feel strong to have their whole country back them up. However, people like us, who don't care about that sort of thing, don't see what the big deal is. Obviously they don't understand why we say what we say.

China is certainly not a nation of people that can take much criticism, constructive or otherwise. If I am talking with my wife and I say that things are done differently in Canada or the United States, she takes it personally and gets upset. (However she can say China sucks whenever she wants, and often does) Taking jabs at a world leader is pasttime in western culture, heck, late night tv is based on it. China is not ready for the world stage yet...besides, the stage they stand on is not built well enough anyways.

My question is: why do they react so badly even to the most mild complaint about China, but are so willing to dish out the abuse? If they'd set aside 1% of their wacky arrogance for a second, they might realize how far reciprocity would get them.

Too much lies, too much deception, too much mokery, too pressure, this is what is the chinese mentality basically consist of.. they dare not speak the truth, fight for liberty and freedom... ancient China used to be a real civilization, but not anymore, nobody care for each other, they just want to make use of each other in order to make as much money they can...

Immature, idiotic reactions to anything based on an inferiority complex and years of being told everyone is out to get them. But, the world won't put up with it much longer. Soon China will be told to piss off by many a foriegn minister. 

Just like most countries around the world, they are quick to criticize their own country but get offended when other people do it.
They have been bombarded with nationalistic propaganda their whole lives, so the only  real connection the Chinese people have with each other is their country, and defending it when they feel insulted.
We all do the same here at this site when we feel expats are being stereotyped....we band together to defend ourselves.
In public they get offended at the slightest critique of their country but privately know most of it is true.
Think about the kid getting beating by his father in public, and when a bystander steps in and tries to protect the kid, the kid defends his father and tells the good samaritan to screw off, because he knows he will get it 10 times worse at home if he doesn't.

The poster above is quite accurate in his perception.

IMHO, it's all about "face" and somehow most of the foreigners here just don't get the perception of "face".  I have been nearly a decade and still I am make mistakes based upon an incorrect rendering of face.

There is a public "face" and a private "face" and they are quite different.  I lived in Japan for a period of time but I would venture to say that the Chinese perception of face is altogether different and more finely tuned.  And "face" is one thing that hasn't changed much here in all of these years.