Federal Reserve Chairman Alan Greenspan warned Thursday that any congressional bid to curb Chinese imports with the aim of protecting U.S. jobs would be doomed to failure.

In testimony prepared for delivery to the Senate Finance Committee, Greenspan said stiffer duties on Chinese imports would simply shift the source of U.S. imports to other low-cost suppliers and hurt U.S. consumers.

"U.S. imports of textiles ... assembled computers, toys and similar products would in part shift from China as the final assembler to other emerging-market economies in Asia and perhaps in Latin America, as well," Greenspan said. "Few, if any, American jobs would be protected."

Greenspan said the sooner China adopted a more flexible currency, the better it would be for it and for the global economy �� a position the administration of U.S. President George Bush has advocated for two years.

But he said there is no credible evidence that U.S. manufacturing activity or factory jobs would be helped by China revamping its currency system.

Greenspan said some "mistakenly believe" that a marked increase in the value of the Chinese currency, the yuan, relative to the U.S. dollar "would significantly increase manufacturing activity and jobs in the United States.

"I am aware of no credible evidence that supports such a conclusion," he said.

The United States' trade deficit swelled to a record $617.6 billion last year, including a $161.9 billion deficit just with China, highest ever with a single country.

Over the last month, the administration has announced new limits on the amount of clothing that China can ship to the United States. It has threatened to brand China a currency manipulator unless it changes its policies. And the government has appointed a special envoy to work with China on these issues.

The Bush administration, however, has refused to bring a trade case against China over its currency practices, something that is vexing to critics.

U.S. manufacturers contend China's system is hurting U.S. exports and contributing to losses of U.S. jobs. Manufacturers believe the yuan is undervalued as much as 40%. The weaker yuan makes Chinese goods cheaper in the United States and U.S. products more expensive in China.

Greenspan said that at some point China will let the yuan rise against the U.S. dollar because its current system represents an increasing threat �� including inflation �� to the Chinese economy.

Greenspan was appearing in front of the committee along with Treasury Secretary John Snow, who similarly said that trying to compel China to adopt a more flexible currency by imposing tariffs on its imports would be counterproductive.

Source: Agencies