UPDATE 2-China trade behavior imperils ties - USTR

* "High time" for China to honor WTO pledges, US aide says

* Says Obama has no position yet on currency legislation

* Says China innovation plan "troubling;" talks next week

* Says China's new gov't procurement offer an improvement

* Urges Beijing to engage more seriously in Doha round (Rewrites first paragraph, updates throughout with details)

By Doug Palmer

WASHINGTON, July 15 (Reuters) - Chinese policies that block U.S. exports and discriminate against foreign firms are putting a dangerous strain on bilateral relations, a top U.S. trade official warned on Thursday.

"It has been nearly a decade since China joined the WTO (World Trade Organization), and it is high time for China to follow through on past commitments, as well as provide new market access," Deputy U.S. Trade Representative Demetrios Marantis said in a speech.

"Failing to do so imperils not just our bilateral ties, but also the success of multilateral trade talks," Marantis said.

He added the United States was prepared to file new WTO cases against China if necessary to defend U.S. trade rights.

The tough talk came as many members of Congress are threatening to pass legislation aimed at China if it does not allow its currency, known as the yuan or renminbi, to rise more rapidly in value against the dollar.

Although China loosened the yuan from a peg to the dollar on June 19, it has risen only 0.70 percent against the greenback since. That's much less than the 25 percent to 40 percent many lawmakers insist is needed to eliminate what they believe is an unfair trade advantage.

Marantis steered clear of the currency issue, but in response to a question said President Barack Obama's administration "hasn't taken a position on pending legislative proposals" opening the door to U.S. duties on some Chinese goods if the yuan doesn't rise more rapidly in value.

Representative Adam Smith, a Washington Democrat, told the same audience he hoped Congress would stop short of passing anti-China legislation that could start a trade war.

But if China continues to ignore U.S. concerns on currency and other trade issues, "Congress will eventually act," Smith said. "I don' think we're quite there yet. But it's something we're keeping a very close eye on."

Marantis said Beijing has issued a "proliferating" number of industrial policies that unfairly favor domestic producers at the expense of foreign firms.

U.S. manufacturers, farmers and services companies also face many other market barriers that restrict their ability to do business in China, he said.

Policies aimed at increasing China's share of the world's patents and copyrights are "very troubling" because of their threat to global intellectual property protections, market competition and the freedom of U.S. companies to decide how and when to transfer technology, he said.

The United States will discuss the matter with a Chinese delegation in Washington next week led by Science and Technology Minister Wan Gang, he said.

Marantis welcomed a long-awaited revised offer China made last week to join the World Trade Organization's Government Procurement Agreement.

Increased access to China's $82 billion government procurement market could be a boon for U.S. exports, but Beijing has long resisted significant openings.

"We are still analyzing (the offer), but we recognize that it includes significant improvements over its initial offer that was submitted at the end of 2007," Marantis said.

However, he criticized Beijing for not doing more to help bring the nearly nine-year-old Doha round of world trade talks to a successful conclusion.

"China has come up short and continues to leave the United States and its global trading partners waiting for more serious engagement, Marantis said. (Reporting by Doug Palmer; Editing by Kenneth Barry)