On Sunday China’s Commerce Minister Chen Deming made a statement that the Celestial Empire will immediately respond if the United States declares the country a currency manipulator and imposes trade sanctions. Washington was accused of politicizing the issue ahead of an April 15 deadline for the U.S. Treasury to rule whether China is unfairly holding down its exchange rate to gain a competitive edge in global markets.

"The currency is a sovereign issue and should not be an issue to be discussed between two countries," Chen told the China Development Forum. Surely, it really is the sovereign issue. When it comes to injuring the interest of the rest of the world it is not the sovereign issue but China in no way should be affected, it should be let do whatever it wishes.

"We think the renminbi is not undervalued, but if the U.S. Treasury gave an untrue reply for its own needs, we will wait and see. If such a reply is followed by trade sanctions, I think we will not do nothing. We will also respond if this means litigation under the global legal framework," he added.

What is it exactly that China will do in response was not specified by Chen.

Meantime, the head of the Asian Development Bank (ADB) expressed his support to the view that Beijing needs to abandon the peg of 6.83 yuan to the dollar imposed in mid-2008 to help China's exporters weather the global financial crisis.

"Greater flexibility in the exchange rate of the yuan would be in the interests of the Chinese economy. Rebalancing is a big challenge and exchange-rate flexibility could contribute to making that process smoother over the years to come," ADB President Haruhiko Kuroda told Reuters.

While it was wrong to rely exclusively on the exchange rate to tilt the economy away from exports and towards consumption, a freer-floating yuan would also strengthen Beijing's control over monetary policy, Kuroda said on the sidelines of the forum.

Speaking on Sunday, Chen said any adjustment to the yuan's value would not by itself resolve global trade imbalances.