UPDATE 1-US commerce chief worried about firms' liquidity

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WASHINGTON, July 20 (Reuters) - U.S. Commerce Secretary Gary Locke said on Monday he was concerned about short-term liquidity problems that could cause small and medium-sized manufacturers to go out of business.

Locke, in a meeting with a manufacturing advisory council, said the Obama administration was working on a "comprehensive response" to help manufacturers facing a cash crunch survive until the economy improves.

The United States also is "going to look to exports to fuel more of our economic growth," Locke said.

Many second- and third-tier suppliers in the auto parts sector are worried about being able to pay their bills while waiting for an upturn in orders, Locke told the Manufacturing Council.

He encouraged the group to send any ideas it has for addressing the liquidity problems "in the next month or so."

Locke, who just returned from a trip to China, said the Obama administration wanted to reduce the huge U.S. trade imbalance with the rest of the world by boosting exports and by holding other countries to higher labor and environmental standards in trade agreements.

He said he told the Chinese last week they need to "open their doors more to U.S. companies selling abroad."

The government can also help U.S. manufacturers sell more goods by reducing the cost disadvantages they face against foreign suppliers, Locke said.

Two big steps to do that would be approval of healthcare reform and the undertaking of a huge national effort, similar to the 1960s space program, to wean the United States from dependence on foreign oil, he said. (Reporting by Doug Palmer, Editing by Andrea Ricci)