WASHINGTON (MarketWatch) -- Legislation that imposes trade restrictions on China could further jeopardize the slowing U.S. economy, a coalition of U.S. global firms warned House lawmakers Thursday.

As Congress debates stimulus proposals to give the U.S. economy a shot in the arm, the coalition argued that legislation to restrict trade with China undermines those efforts.

The letter to House Ways and Means Committee lawmakers, signed by 144 U.S. companies and 41 trade associations, comes at a time when Democrats are crafting legislation that addresses several U.S. trade complaints with China.

The House bill is expected to allow U.S. manufacturers to seek anti-dumping and countervailing duties when countries intervene in markets to keep the value of their currencies low. Such measures are opposed by Bush administration officials, who have said they would be vulnerable to legal challenges at the World Trade Organization.

The bill will also likely include a provision to formally authorize anti-subsidy tariffs to be imposed on Chinese goods. The Commerce Department already does so, after reversing a longstanding policy last year.

Using U.S. trade remedy laws to attack alleged Chinese currency abuses would backfire, the business groups warned. "Such measures are more likely to prompt China to restrict, rather than open, its own market, as well as take other countermeasures that would undermine U.S. competitiveness and our economic interests," they wrote.

"At a time when Congress is working to shore up U.S. economic growth, we urge you not to take action that could diminish U.S. competitiveness, particularly with respect to a market as important to the United States' continued growth as China," the letter continued.

Corporations that signed the letter include Best Buy Co., FedEx, Honeywell, Liz Claiborne, and Sun Microsystems.

Treasury Secretary Henry Paulson told Senate lawmakers Wednesday that legislation to force Beijing to revalue its currency would be "bordering on the silly."

By Martin Vaughan

-Contact: 201-938-5400

Last update: 10:28 p.m. EST Feb. 7, 2008

Source: www.marketwatch.com