So far, China's biggest European investment has been in the Belgian financial company Fortis NV, of which Ping An Insurance recently acquired a 4.2 percent stake, making it the largest shareholder in the company. China Development Bank also made an investment in Barclays to bolster its bid for ABN AMRO, which, though it failed, helped the Dutch bank get the full value for its assets.

This is only a start. Merrill Lynch predicts that, as currency reserves climb in countries like China, State-run investment funds will grow to $7.9 trillion, from $1.9 trillion now.

China's currency peg has also come in handy for Europe in its fight to keep inflation in check, while its monetary policy remains constrained by the subprime crisis.

Experts estimate that, in terms of guarding against inflation, the euro's appreciation has been equivalent to about 35 basis points rise in the interest rate. The strong euro has helped insulate Europe from skyrocketing oil and commodity prices, which are priced in dollars on the world markets.

The big downside of the currency peg for Europe is supposed to be exports. That's what sent French President Nicolas Sarkozy and other high-level European officials scurrying off to China last November and why many ordinary Europeans continue to think of the Chinese as not playing by the rules.

This is protectionist thinking par excellence. What makes exports so special? Why are they more important than cheap imports or the bargains that European shoppers get in New York? Should Europe give up all the advantages of the currency peg just because it makes European exports more expensive? Of course not!

Note that it was French leaders who went to China to protest the currency peg, not German leaders. German exports are not being substantially damaged by the strong euro – indeed, German costs are so competitive that exporters are confident they can cope with the euro at $1.50 and even higher.