By Doug Palmer and David Lawder
WASHINGTON (Reuters) - Republican lawmakers aired U.S. grievances over subsidies, piracy and other Chinese trade practices on Tuesday, but said President Barack Obama must take the lead on tackling China's exchange rate policies.
As the House of Representatives Ways and Means Committee grilled Obama administration trade and Treasury Department officials, Republican leaders made it clear they would not pursue a punitive currency bill passed by the U.S. Senate.
The legislation, which calls for duties on Chinese products to offset an artificially cheap Chinese yuan, symbolizes U.S. concern about the loss of American jobs blamed on trade with China that is intensifying as the 2012 congressional and presidential election approaches.
The Obama administration has signaled concerns about the bill but has not taken a formal position on it.
"I think it's a very dangerous policy," House Speaker John Boehner, the top Republican in Congress, told a news conference. "The fact is the president of the United States ought to stand up and take a position."
Boehner's opposition could derail a bill that has strong rank-and-file support. Republicans control the House while Obama's fellow Democrats control the Senate.
Echoing Boehner, Ways and Means Committee Chairman Dave Camp urged the administration to tell Congress what it "should and should not do" to address concerns about Chinese trade and currency practices.
"Some in Congress focus on legislation to address currency manipulation as if it were a silver bullet," Camp said. "In doing so, they miss the many issues we have with China."
Camp cited a long list of U.S. concerns that included theft of U.S. intellectual property, lavish domestic subsidies, discriminatory regulation and curbs on exports of scarce raw materials such as rare earth minerals.
While Obama has stopped short of endorsing the currency legislation, he has said he believes China is "gaming" international trade by holding down the value of the yuan to give Chinese firms an competitive price advantage.
YUAN CALLED 'MISALIGNED'
Obama will host Asia-Pacific leaders, including Chinese President Hu Jintao, at a summit aimed at boosting transpacific trade next month. Protectionist U.S. legislation would undercut Obama's efforts to open markets, analysts say.
A senior U.S. Treasury official told the committee the yuan needs to rise faster to correct a "misaligned" exchange rate, although that would not eliminate the U.S. trade deficit.
"Renminbi appreciation on its own will not erase our trade deficit," said Lael Brainard, undersecretary for international affairs, using another name for the yuan.
She told lawmakers the administration would continue to stand up to what she called China's unfair and discriminatory trade and investment practices but also continue to "engage and encourage China" to pursue reforms.
The Treasury has given the bill a lukewarm reception, saying that while it shares the goals of the legislation, there are concerns it may not be consistent with world trade laws.
"Aspects of pending legislation ... do raise concerns about consistency with our international obligations and we are discussing these issues with members (lawmakers)," Brainard said.
Brainard said despite the yuan's 7 percent increase against the dollar since June 2010, China's continued rapid accumulation of foreign exchange reserves and the declining share of consumption in its economy "indicate that the real exchange rate of renminbi remains misaligned despite recent movement, and a faster pace of appreciation is needed."
Representative Sander Levin, the top Democrat on the Ways and Means Committee, accused Republicans of taking a "hands off" approach to China trade at a time when the American people are demanding that Congress "act to end a variety of China's predatory trade practices," including currency manipulation.
The bill to crack down on China currency practices now has 230 co-sponsors in the House, more than enough to win approval if Boehner allows it to come up for a vote, he said.
"Because currency is not China's only predatory and trade-distorting policy, that cannot be an excuse for refusal to act on it. Nor does it mean not acting on other key issues," Levin said.
(Additional reporting by Andy Sullivan; writing by Paul Eckert; Editing by Will Dunham)