By Doug Palmer
WASHINGTON (Reuters) - Senate plans to vote next week on legislation to crack down on China's currency practices, despite concerns that could heighten trade tensions and further threaten global economic growth.
Senate Majority Leader Harry Reid said he planned to bring up the legislation next week when lawmakers return from a break.
"I don't think there is anything more important (as a) jobs measure than China trade. That is what we are going to work on next week," Reid told reporters on Monday, saying the measure had support from both Republicans and Democrats.
"I feel very confident that we are going to pass it," Reid said.
A key provision of the Senate bill would instruct the Commerce Department to treat undervalued currencies as a subsidy under U.S. trade law, allowing companies to ask for countervailing duties against imports on a case-by-case basis.
The Congressional Budget Office estimated a similar measure passed last year by the House of Representatives would collect about $125 million in new tariff revenues over ten years, based on its conclusion that a "small share" of imports from China and other countries would qualify for the relief.
Opponents acknowledge Reid probably has the votes to pass the legislation, but hope House Republican leaders will prevent the bill from reaching President Barack Obama's desk by refusing to bring it up for a vote.
However, with Republican presidential candidate Mitt Romney promising to get tough on China currency from his first day in office, "momentum seems to be building with U.S. politicians to send a message to China," one U.S. industry aide said.
The Obama administration has so far declined to comment on the bill, which Senators Charles Schumer, Sherrod Brown and other Democrats and Republicans unveiled last week.
US TREASURY REPORT
The lawmakers argued China's currency is undervalued by as much as 25 percent to 40 percent against the U.S. dollar, giving Chinese companies an unfair price advantage and destroying millions of American jobs.
China rejects the criticism and last week a Chinese foreign ministry official urged the United States to "not politicize the renminbi's exchange rate because of U.S. domestic economic problems."
Renminbi is the formal name for China's currency, which is also called the yuan. It has risen about 3 percent in value so far this year and 6.7 percent since its peg to the dollar was loosened in June 2010.
Still, policymakers are already worried Europe's debt crisis could undermine global growth. A trade war between the United States and China would be more trouble.
However, current House Republican leaders have not been anxious to pursue China currency legislation.
The Senate will hold a procedural vote on Monday to clear the way for action on the bill. Lawmakers hope to finish the Senate's work on the bill by the end of the week.
Meanwhile, the Treasury Department faces an October 15 deadline for its semi-annual report on whether any country is manipulating its currency for an unfair trade advantage.
In five previous reports, the Obama administration has urged China to move faster to revalue its currency but has declined to label it a currency manipulator.
The Senate bill would require the Treasury Department to identify countries with "fundamentally misaligned" currency, a less incendiary designation.
If past behavior is any guide, the Treasury Department likely will delay its upcoming currency report until after the Group of 20 and Asia Pacific Economic Cooperation summit meetings in the first two weeks of November.
High-level bilateral talks known as the U.S.-China Joint Commission on Commerce and Trade are also expected in early November.
(Additional reporting by Thomas Ferraro; Editing by Vicki Allen and Jackie Frank)