China warned U.S today, it may strike back if the United States imposes trade policies and other penalties over its exchange rate policy. With China improving speedily from the financial crisis, even as Europe and the U.S. try to deal with obstinately high rates of joblessness, Beijing's decision to keep the Yuan largely unaffected against the U.S. dollar since July 2008 has increasingly drawn criticism. Undervalued Yuan is giving Chinese exporters a competitive edge against exporters elsewhere.

The U.S. Treasury Department must make a decision by April 15 whether to tag China a currency manipulator in its semi-annual report to Congress on the currency policies of its trading partners. Some senators last week introduced a legislation, that would require the U.S. to hit excises and other penalties on nations, that fail to address uneven currencies.

Beijing has effectively bolted the Yuan to the US dollar, since mid-2008, which critics say, keeps the currency's value unnaturally low, making its exports cheaper and thus more bloodthirsty on overseas markets.

A Chinese Vice-Commerce Minister, Zhong Shan, will meet U.S. representatives, including members of Congress, to seek ways to improve the bilateral trade relationship among mounting political and economic tensions.