A group of senators, on the eve of Chinese President Hu Jintao's arrival in the United States, said it was vital Congress pass legislation to get tough with China over its currency practices.
There's no bigger step we can take to preserve the American dream and promote job creation, particularly in the manufacturing sector ... than to confront China's manipulation of its currency, Democratic Senator Charles Schumer said.
The message to Hu is we are fed up with your government's intransigence on currency manipulation. If you refuse to play by the same rules, we will force you to do so, Schumer said in a conference call on a proposed bill to prod China to raise the value of its yuan currency.
Beijing's undervalued currency gives Chinese companies an unfair price advantage in trade and have acted like a boot on the throat of U.S. economic recovery, he said.
The heated rhetoric shows how negatively many U.S. lawmakers view China as Hu arrives in Washington on Tuesday for a state visit with President Barack Obama.
In one effort by Beijing to generate goodwill for the trip, representatives of hundreds of Chinese companies will be in the United States this week in conjunction with Hu's visit.
Events are planned in about a half dozen cities including Houston, Boston, Chicago, Minneapolis, Raleigh, North Carolina and Frankfort, Kentucky.
Business deals worth potentially tens of billions of dollars could be announced but U.S. industry officials have been hesitant to estimate a dollar amount.
Schumer, who was joined on the call by Senators Debbie Stabenow and Robert Casey, said there was broad bipartisan support in both the Senate and the House of Representatives to pass currency legislation.
However, lawmakers in both chambers have complained for years that China undervalues its currency by as much as 40 percent but have not fully approved legislation that would do something about it.
That was true last year, when the House passed a China currency bill but the Senate failed to act.
In a rare written interview published on Sunday by the Wall Street Journal and the Washington Post, Hu said China had taken steps toward a more flexible exchange rate policy.
But he appeared to reject a U.S. argument that Beijing let its currency appreciate faster to help rein in domestic inflationary pressure.
China is the world's biggest foreign holder of U.S. government debt, with a third of its $2.85 trillion in foreign exchange reserves invested in U.S. Treasuries.
The senators' bipartisan bill would require the Treasury Department to investigate China's manipulation of its currency and actually do something about it, Schumer said.
By also allowing companies to request the Commerce Department impose duties to offset Beijing's exchange rate practices, the bill tells China we want you to have a level playing field on trade. If you don't we're going to create it ourselves, Stabenow said.
But John Frisbie, president of the U.S.-China Business Council, warned passing currency legislation would likely backfire on the United States by inflaming relations and opening the door to retaliation.
It's counterproductive. It wouldn't help get to the goal of a market-oriented exchange rate, he said.
Senate Finance Committee Chairman Max Baucus, in a letter to Hu, also urged China to showed a renewed commitment to move to a more market-oriented exchange rate and to follow through on recent commitments to fight copyright piracy by taking concrete steps to boost use of legal software.
On another issue important to the Montana Democrat, Baucus said he was disappointed that talks aimed at reopening China's market to U.S. beef have not been resolved.
I urge these negotiations to successfully conclude as quickly as possible. International scientific standards (regarding the safety of U.S. beef) are clear, and there simply is no excuse for China's refusal to abide by them, he said.
(Reporting by Doug Palmer and Emily Stephenson; editing by Bill Trott)