We type in "pinyin" based on latin letters. There are many IME ,(i.e.Input Method Editor ) in China .the most populate Chinese input softwares are Google Chinese Input Method and Sougou IME...in fact ,They support to input both Chinese and English intelligently ...
If interested ,download here " http://dl.google.com/pinyin/v1/GooglePinyinInstaller.exe " or '' http://ime.sogou.com/dl/sogou_pinyin_41d.exe " The second one is more popular and allow you input English with spelling indication after cliking ctrl +shift+ E.....