China keeps the iron fist of currency manipulation as an option

In a recent gathering of Chinese and American financial heavyweights at the Palace Hotel in New York City, China Investment Corp. chairman Lou Jiwel delivered an unambiguous message: “If your Congress passes a bill labelling us as currency manipulators, we will crush you. And because we find your government rather difficult to deal with, please convey that message on our behalf.” 

The audience included American billionaire investors such as John Paulson and Henry Kravis, head of KKR, the global buyout firm that is increasing activities in Asia, as reported elsewhere on

Because of the euro zone crisis and investors fleeing the euro (FXE, quote) for the American dollar (UUP, quote), there has been no visible sign of China “crushing” the United States just yet.

If anything, the yuan (CYB, quote) has been allowed to float to its highest levels in history against the dollar, which is exactly what the lawmakers in Washington wanted to see in the first place. 

However, as the world’s largest exporter with over $3 trillion in foreign reserves — far more than any other country — China certainly carries weight in global matters. 

As detailed on, this was manifested in the copper (JJC, quote) market last year. 

With vast financial resources, China could easily wreak havoc in bond markets already weakened by Europe’s inability to resolve its debt crisis after endless summits. 

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