WASHINGTON, Nov 1: A swift rise in the value of China’s currency probably would not provide US manufacturers with the help that they expect and could backfire on the United States, a top economist said on Friday.

The testimony before the House of Representatives Ways and Means Committee came as many lawmakers are calling for China to move quickly to a flexible exchange rate.

Lawmakers and manufacturers complain China’s practice of pegging its yuan at 8.28 to the dollar gives it an unfair trade advantage by artificially depressing the price of its exports.

But David Malpass, chief global economist of Bear, Stearns and Co. in New York, warned against swift Chinese action.

It would be harmful for China to float its currency or change its value substantially, he told the panel.

A Chinese revaluation would be counterproductive to the US in that it would actually accelerate the flow of capital, technology and expertise to China, he said.

Instead, Beijing should move gradually to a flexible exchange rate, Malpass said.

Many lawmakers also blame China’s fixed exchange rate for millions of manufacturing job losses in recent years.

But Malcolm O’Hagan, president of the National Electrical Manufacturers Association in Virginia, said many of the problems facing US manufacturers are home grown.

It is easy to point the finger at the Chinese when we are not competitive, but in fact the problems are of our own making, O’Hagan said.

High health care costs and the expense of complying with environmental, work safety and other regulations make it harder for US firms to compete internationally, he said.

But Jeffrey Somple, president of Mack Molding Company, said many small manufacturers remain convinced of the need for China to revalue its currency.

We are not asking for tax relief. We are not asking for tariffs or trade barriers. All we’re asking for is that the rules are the same for everyone playing the game, he said.

Richard Trumka, secretary-treasurer of the AFL-CIO, the United States largest labor organization, also said the time had come for the United States to take strong action.

It is now clear that simple diplomacy and jawboning have utterly failed, he said.

Trumka urged Congress to initiate a case against China’s fixed currency program in the World Trade Organization.

However, on Thursday, the Bush administration said China was not violating currency manipulation laws in pegging its yuan to the dollar.

Treasury Secretary’s John Snow told the Senate Banking Committee that “financial diplomacy” was the best way to help China move toward a more flexible exchange rate.—Reuter