US lawmakers prod China's Wu on currency, trade

WASHINGTON, May 24 (Reuters) US lawmakers stepped up pressure on China on trade, giving mixed reviews to high-level economic talks and urging China's top economic envoy to address complaints about China's currency.

The powerful House of Representatives Ways and Means Committee yesterday told Chinese Vice Premier Wu Yi that China was flouting world trade rules by manipulating the value of its currency to boost exports and distorting trade with subsidies.

''The committee has serious concerns about China's massive and constant interventions in the currency markets,'' it said in a letter given to Wu when she visited Capitol Hill following two days of ''senior economic dialogue'' in Washington.

''Those interventions keep the value of the Chinese currency, the renminbi, artificially low -- making exports from China relatively cheap and imports into China relatively expensive,'' said the letter, signed by Ways and Means Committee Chairman Charles Rangel, a New York Democrat, and other senior lawmakers.

''The Committee is increasingly concerned about trade-distorting subsidies in China,'' it said, calling those subsidies a violation of China's World Trade Organization pledges that must be ended ''without further delay.'' Wu's meetings with lawmakers came amid criticism of the economic talks from other senior legislators who believe China's currency is undervalued and have threatened punitive trade legislation.

''I am deeply concerned that the SED did not address China's unscientific and WTO-inconsistent ban on U.S. beef or the undervaluation of China's currency,'' said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.

LEGISLATION LOOMS? Sen Charles Schumer, who has teamed up with Baucus to write a bill aimed at forcing China to revalue its currency, issued a statement slamming market access promises that ''rarely seem to become reality from China.'' ''In addition, there is a glaring omission to the White House press release: an eight-letter word, 'currency,''' said Schumer, a New York Democrat and vocal China critic.

The host of the Washington talks, US Treasury Secretary Henry Paulson, said earlier that Wu and her Chinese delegation expected to ''hear some strong views.'' Wu was also scheduled to meet with House Speaker Nancy Pelosi, a California Democrat, yesterday. She meets with Senate Majority Leader Henry Reid, a Nevada Democrat, and members of the Senate Finance Committee to, as well as with US President George W Bush.

Many members of Congress remain angry over China's exchange-rate policies despite Beijing's decision on Friday to widen the yuan's daily trading band to 0.5 per cent from 0.3 per cent.

China's move was not enough to quell concerns that the yuan is undervalued by up to 40 per cent, giving Chinese companies an unfair trade advantage, said House Ways and Means Trade Subcommittee Chairman Sander Levin, a Michigan Democrat.

Ways and Means Committee members said they believed Congress would pass legislation to address China trade concerns.

''There is a bipartisan sentiment in Congress that we're not being tough enough,'' said Rep. Tim Ryan, an Ohio Democrat and co-author of a bill that would allow the United States to levy duties against China's exchange-rate ''subsidy.'' REUTERS DKS PM0520