NEW YORK (CNNMoney) -- Senate Democrats renewed their push to crack down on countries that manipulate their currencies, ahead of a key meeting between Chinese President Hu Jintao and U.S. President Barack Obama in Washington.
A bill introduced Monday by Senator Charles Schumer and two other Democrats, would impose penalties, including possible tariffs, on nations that manipulate their currencies -- particularly China.
The Senators told reporters in a conference call that China's currency and trade polices undercut U.S. manufacturers and are costing American jobs.
"China's currency is like a boot on the throat of America's economic recovery," Schumer said.
The senators and other critics say the government-controlled People's Bank of China artificially undervalues the yuan, bringing down the cost of Chinese exports and giving it an unfair advantage in the international market.
While the yuan has risen modestly since China announced plans last year to let it trade in a prescribed range against the dollar, the Senators say the currency is still undervalued by up to 40%.
The latest effort to address the currency issue comes as President Hu travels to the United States for a high profile meeting with President Obama on Wednesday. The U.S. has been ratcheting up pressure on China to address its undervalued currency and dependence on exports, as the world's most populous nation has roared out of the global recession.
Treasury Secretary Timothy Geithner said last week that China needs to do more to address its currency and trade imbalances. But he was confident that such changes would take place, adding that higher inflation in China is making U.S. goods more competitive there, offsetting the advantage of the cheaper yuan.
In written remarks published Monday, Hu called the dollar-dominated international currency system a "product of the past" and said the yuan will emerge as a global currency.
He also criticized the Federal Reserve for its plan to buy $600 billion worth of U.S. debt to stimulate the economy. The policy is particularly alarming for China, given that it holds billions of dollars in government debt.
But Hu sought to ease tensions between the two nations, saying he wants to strengthen ties with the United States. "We both stand to gain from a sound China-U.S. relationship, and lose from confrontation," he said.
The bill "sends a clear message to President Hu," according to Schumer. "We are fed up with your government's intransigence on currency manipulation, and if you refuse to take action, we will force you to do so."
The new legislation, called the Currency Exchange Rate Oversight Reform Act of 2011, would establish clearer criteria for the Treasury Department to designate a nation as a currency manipulator, paving the way for more strict penalties.
The bill also outlines a number of steps the U.S. would be required to take against countries deemed currency manipulators.
The actions range from relatively benign steps such as opposing governance changes with the International Monetary Fund, to more aggressive moves like imposing duties on goods made in nations designated currency manipulators.
Under the proposal, the U.S. would be obliged to dispute settlements made by designated nations in the World Trade Organization and require the Federal Reserve to directly intervene in the currency markets in cases where currency manipulation continues for over one year.
The bill combines elements of legislation introduced last year by Schumer and Republican Senator Lindsey Graham of South Carolina, with a separate proposal by Democratic Senators Debbie Stabenow of Michigan and Bob Casey of Pennsylvania.
More money is expected to be wagered on the Mayweather vs. Pacquiao showdown than on any other fight ever. More
The U.S. economy and markets have been flat this year. More
Most victims of workplace violence are women. Immigrants and Latinos are most likely to suffer fatal accidents at work. More