By Jonathan Lynn
DAVOS, Switzerland, Jan 28 (Reuters) - The U.S. Chamber of Commerce is confident that "Buy America" provisions included in a House of Representatives stimulus package will be of limited impact, its chief said on Wednesday.
Thomas Donohue, president and chief executive of the chamber, which represents 3 million U.S. businesses, also told Reuters he did not believe President Barack Obama's administration would rush into a conflict with China over exchange rates.
The House approved a provision on Wednesday requiring public works funded by its $825 billion stimulus package to use only U.S.-made iron and steel.
Donohue said the provisions would violate international trading rules and be counterproductive to U.S. interests.
"An expansion of the current 'Buy American' rules would be a dumb idea, it would be a bad idea because the natural reaction would be for our trade partners to react in kind," he said.
Donohue said in an interview he believed the provision, which could lead to shortages of material in the United States, would either be amended in a conference between the House and Senate on the package, or never fully implemented.
U.S. businesses also fear the provision could push up costs by forcing companies to certify the origin of materials.
Donohue also said the United States was also unlikely to force China to revalue its currency because of the difficulties China too is facing as the global economy slows.
U.S. Treasury Secretary Timothy Geithner said during confirmation hearings last week that Obama believes China is manipulating its currency.
"The message that's basically coming out of the White House and elsewhere is that that is not the first thing on our agenda and we are probably not looking to pursue that while we're dealing with all the other issues," Donohue said.
"My view is you won't hear a lot of that from Geithner in the next weeks."
Chinese Premier Wen Jiabao blamed U.S. debt-financed spending and a blind pursuit of profit for the global financial crisis in a speech at the World Economic Forum in Davos on Wednesday but did not directly address the currency issue.
Donohue, who visited China, Japan and South Korea earlier this month, said the rapidly slowing Chinese economy meant it was politically impossible for Beijing to make a drastic adjustment to its exchange rates.
The best U.S. approach was to keep pressure on China for a gradual adjustment.
"The Chinese right now are faced with a massive challenge: they go from maybe 8 percent growth, they're saying now 6 -- we've just come back from China -- maybe 5. So they're talking about unemployment numbers that are really serious," he said.
Donohue said that as China modernised new consumer markets were opening up for U.S. exporters.
"We want to be able to sell to a middle class and an upper class in China. It would be a huge benefit for us," he said. (For full coverage, blogs and TV from Davos go to http://www.reuters.com/davos) (Reporting by Jonathan Lynn; Editing by Giles Elgood)