updated 1/10/2006 7:30:37 AM ET 2006-01-10T12:30:37

A leading U.S. lawmaker warned Chinese officials Tuesday that Beijing is risking a protectionist backlash in Washington if it doesn't take steps to cut its $200 billion trade surplus with the United States.

Without Chinese action, "Washington may take measures to reduce the trade imbalance by reducing Chinese exports to the United States. And that is an outcome in neither party's interests," Sen. Max Baucus, a member of the powerful Senate Finance Committee, said in a speech to a group of business executives in Beijing.

Baucus said he met earlier with Commerce Minister Bo Xilai and other officials and warned them of rising economic anxiety in the United States and support for protectionist measures.

He didn't say what steps Beijing should take, but mentioned complaints about its currency controls and that it hasn't fully complied with market-opening commitments.

Baucus said the Chinese officials seemed receptive but did not make any specific commitments.

"I think they understood. There was no argument," he said. "The good news is that I didn't get a lot of pushback. I didn't get a lot of argument."

China's trade surplus with the United States in 2005 is forecast to top $200 billion, up nearly 25 percent from the surplus in 2004, which was the biggest on record.

Baucus, from Montana, is the senior Democrat on the Finance Committee in the Republican-controlled Senate.

He cited legislation proposed by Sen. Chuck Schumer, a fellow Democrat, that would raise tariffs on Chinese goods unless Beijing does more to allow its currency, the yuan, to rise in value against the dollar. China's trading partners say the state-set exchange rate for the yuan is too low, giving Chinese exporters an unfair price advantage.

"There's a very significant economic insecurity in the United States these days," Baucus told reporters after his speech to members of the American Chamber of Commerce in China.

Without Chinese action, he said, "I'm fearful that when, say, the Schumer amendment comes up, it might pass."

Baucus said he was due to meet later Tuesday with Premier Wen Jiabao, China's top economic official.

Baucus said Beijing could head off protectionist sentiment by making an unspecified "significant action" to show it "is doing something to address the issue."

"That would be a huge political statement and a very positive political statement," he said.

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