US President Barack Obama faced growing congressional pressure 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 US economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors," 130 legislators said in a letter to US Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke.
Many economists estimate China's currency is undervalued by 25 per cent to 40 per cent, giving it a huge trade advantage by effectively subsidising its exports and taxing its imports.
Wen yesterday dismissed US complaints about China's exchange rate, calling them counterproductive. He also blamed Washington for a deterioration in US-China ties because of US 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.
"We have a mature relationship with China," Jeff Bader, Obama's advisor on ties with Beijing, told reporters at a briefing to preview the president's March 21-26 trip to Indonesia and Australia.