China needs to raise the value of its currency by a “significant” amount or the United States will take action, a top U.S. lawmaker in the latest sign that tensions on the yuan remain high.

“I think 2 to 3 percent over a year would be totally unsatisfactory,” House of Representatives Ways and Means Committee Chairman Sander Levin said, commenting on a market estimate about the size of a possible move.

“I think it has be significant. It doesn’t have to be all at once. But there has to be clear pattern of revaluation. A clear path,” Levin told the Reuters Global Financial Regulation Summit.

Mainstream Western economists estimate China’s currency is undervalued by as much as 40 percent, effectively subsidizing its exports and taxing its imports.

China defends its exchange rate policy as an internal matter it manages to maintain economic stability.

Levin, whose committee has jurisdiction over tax and trade issues, said he remained hopeful that U.S.-led multilateral pressure on China would yield good results by the Group of 20 major economies summit meeting in late June.

If not, the United States has various options for exerting pressure on China, such as allowing companies to request the Commerce Department impose “countervailing duties” against China’s exchange rate, Levin said.

Another possibility would be filing a trade complaint at the World Trade Organization, he said.

The veteran lawmaker, who helped win congressional approval of “permanent normal trade relations” for China a decade ago, resisted saying how much Beijing needed to raise the value of its yuan currency to satisfy the United States.

However, action in currency markets suggested traders expect China to raise the value of the yuan just 2.93 percent over the next 12 months.

“I think it has be many times 2 to 3 percent over a year to have an impact,” Levin said, noting estimates of how much China’s currency is undervalued range from 15 percent to 40 percent.

A bipartisan group of senators is pushing legislation that would allow U.S. companies to seek countervailing duties against China’s exchange rate practices. They are threatening action on the bill by the end of May.

That could cast a pall over the annual high-level U.S.-China talks known as the Strategic and Economic Dialogue, set for May 24-25 in Beijing.

The House would also have to approve the measure for it to become law. (Reuters)