The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion of foreign reserves as a political "nuclear" weapon to counter pressure from the US Congress.

I was doing some background research for my own post on this topic and got scooped.

I'll throw some of it out there for discussion:

Two days ago the Boston Herald had this to say in an op-ed about the trade dispute and economic cold war going on between China and the US:

China-bashing pointless
China-bashing pointless

Bills are moving in Congress aimed at forcing China to cheapen its currency quickly. They represent bad ideas that could hurt the U.S. economy.

It’s in China’s interest to make its currency more expensive, and it is slowly doing so. Any official U.S. action aimed at producing an acceleration is likely to put the backs of Chinese officials up and could provoke retaliation.

U.S. Senator Warns Beijing Over Yuan
U.S. Senator Warns Beijing Over Yuan

BEIJING - Sen. Joe Lieberman told Chinese lawmakers Tuesday a Senate panel measure that could lead to possible sanctions against Beijing should be taken as a warning of America's frustration over the nation's currency valuation.

U.S. senator warns Beijing to take currency bill as warning over yuan
U.S. senator warns Beijing to take currency bill as warning over yuan

U.S. Treasury Secretary Henry Paulson and other officials are trying to forestall drastic action by Congress. Paulson is leading a "strategic economic dialogue" with Beijing over currency and other disputes, and says it is producing results.