"China has intervened massively in the foreign exchange markets for at least five years, buying at least $1 billion every day to keep the dollar strong and its own renminbi weak," Fred Bergsten, president of the Peterson Institute for International Economics, said in the text of a speech.
"This is by far the largest protectionist measure adopted by any country since the Second World War -- and probably in all of history," Bergsten said.
Bergsten estimated the China's renminbi, also known as the yuan, is currently undervalued by at least 20 percent against the U.S. dollar as a result of China's currency intervention.
That "is the equivalent of a subsidy of 20 percent on all China's exports and an additional tariff of 20 percent on all China's imports," Bergsten said.
Bergsten, who served in various White House and Treasury positions between 1969 and 1981, has long been a critic of China's exchange rate policies.
His latest broadside comes amid signs Beijing could let the yuan rise more rapidly to contain inflation.
Meanwhile, U.S. government data on Thursday showed the bilateral trade deficit with China grew nearly 12 percent in the first half of 2011 to $133.4 billion, which could stir Congress to act on currency concerns.
Bergsten again urged the U.S. Treasury Department to formally label China a currency manipulator, something it has refused to do five times under President Barack Obama.
Treasury's next semi-annual report on the foreign exchange trading practices is due on Oct 15. Labeling China a currency manipulator would require the department to launch negotiations with Beijing to remedy the situation.
Bergsten also suggested other U.S. policy responses, such as filing a case at the World Trade Organization against China for currency manipulation and then sharply limiting its access to the U.S. market if the case prevailed.
Or "we could initiate 'countervailing currency intervention,' buying Chinese renminbi to offset the effect on our exchange rate of their massive purchases of dollars," Bergsten said.
