It looks like China is finally working on getting the Varyag up and running, at least according to the New York Times. Though it seemed, at first, to be a silly notion for China to spend so much time and money developing an aircraft carrier, it makes more sense to me now. The country feels the need to project power into (at least) the Straits of Malacca, and preferably out to the "American defense belts".
What I worry about now is American/Western over-reaction. America has 11 carriers, all of which more than match this one. No other state has more than one carrier, and we also have more "mini-carriers" (VSTOLs) than all other states combined. One little carrier, particularly for a country without much of a navy otherwise, won't change that much.
More importantly, it won't really affect our security issues with China. A carrier is impractical for threatening its immediate neighbors, like Taiwan or Japan. Chinese missiles and planes can reach them already. If anything, it is merely a show of force. It's not something to worry overmuch about.