* 130 lawmakers write letter to Geithner, Locke
* Say failure to act on China will hurt economic recovery
* White House says Sino-U.S. ties good; some differences
(Updates to note senators' news conference on Tuesday)
By Doug Palmer
WASHINGTON, March 15 President Barack Obama
faced growing congressional pressure on Monday to get tough
with China over its currency practices, one day after Chinese
Premier Wen Jiabao brushed off accusations that Beijing was
undervaluing its currency for an unfair trade advantage.
"The impact of China's currency manipulation on the U.S.
economy cannot be overstated. Maintaining its currency at a
devalued exchange rate provides a subsidy to Chinese companies
and unfairly disadvantages foreign competitors," 130 lawmakers
said in a letter to U.S. Treasury Secretary Timothy Geithner
and Commerce Secretary Gary Locke.
House of Representatives Ways and Means Committee Chairman
Sander Levin announced his panel would hold a hearing on March
24 to examine the impact of China's exchange rate policy on the
U.S. and global economic recoveries and on U.S. job creation as
well as "steps that could be taken to address the issue."
Senator Charles Schumer, a member of the Senate Democratic
leadership, and Senator Lindsey Graham, a South Carolina
Republican, have set a news conference on Tuesday to discuss
legislation to prod China on the currency front.
Many economists estimate China's currency is undervalued by
25 percent to 40 percent, giving it a huge trade advantage by
effectively subsidizing its exports and taxing its imports.
Wen on Sunday dismissed U.S. complaints about China's
exchange rate, calling them counterproductive and saying he did
not believe the country's currency was undervalued.
He also blamed Washington for a deterioration in U.S.-China
ties because of U.S. weapon sales to Taiwan and Obama's meeting
with Tibet's spiritual leader, the Dalai Lama, last month.
The White House said relations between the United States
and China were in "good shape" but acknowledged some
differences between the two countries.
But the lawmakers' letter showed the pressure Obama faces
to push China to revalue its currency, which many U.S.
lawmakers believe is to blame for lost manufacturing jobs and
the huge U.S. trade deficit with China.
"If the administration fails to act on this issue it will
hold back our economic recovery and hurt the ability of
American small businesses and manufacturers to increase their
production, keep their doors open, and create jobs," said
Representative Michael Michaud, a Democrat.
White House adviser Jeff Bader said China's rising
influence in the Asia-Pacific region would be on the agenda
during Obama's trip to Indonesia and Australia next week.
"We're also looking to reshape the international regulatory
system through the G20 in a way ... that new actors such as
China are acting consistently with international norms," he
said when discussing coming talks between Obama and Australian
Prime Minister Kevin Rudd.
CURRENCY MANIPULATOR LABEL
A few years ago, Schumer and Graham offered legislation
threatening to hit China with a 27.5 percent tariff unless it
raised the value of its currency to address U.S. concerns.
Schumer and Graham are working this time with Senators
Debbie Stabenow and Sherrod Brown, two Democrats who have been
pressing for action on China's currency for years.
In their letter on Monday, lawmakers in the House of
Representatives urged the Commerce Department to make a major
policy change and agree to impose countervailing duties on a
case-by-case basis against countries that manipulate their
currency for an unfair trade advantage.
The department is already considering that possibility in a
case involving coated paper imports from China.
The lawmakers also demanded the Treasury Department
formally label China as a currency manipulator in an April 15
report on the currency practices of major trading partners.
Representative Tim Ryan, a Democrat, said in the letter
that Obama should work with the International Monetary Fund and
other countries to pressure China to revalue its currency.
If that pressure fails, they urged, the Obama
administration officials should consider filing a complaint
against China under the World Trade Organization.
Although Beijing has emerged from the global financial
crisis more confident than ever, Dewey & LeBoeuf trade lawyer
Alan Wolff said the "gold rush atmosphere" following China's
entry into the WTO in 2001 has faded among governments and
companies after years of tolerating discriminatory Chinese
policies in the hope of winning market access.
"I think one is going to see a reexamination of China
policy in a number of capitals," Wolff said.
(Additional reporting by Matt Spetalnick, Ross Colvin and Paul
Eckert, Editing by Kenneth Barry, Gary Hill)