Greenspan said there is no "statistical or analytical" support for the contention that revaluing of China's currency would increase U.S. jobs or exports. "It is nonetheless the case that a more flexible (currency) ... would be helpful to China's economic stability and, hence, to world and U.S. economic growth," he told the Senate Finance Committee.

China has pegged the yuan — also known as the renminbi — to the dollar at a fixed rate for 10 years. U.S. trade groups, such as the National Association of Manufacturers, have argued that the policy holds down the value of the yuan and gives Chinese producers an unfair advantage in world trade. If the yuan would rise on the free market in relation to other currencies, it would make Chinese exports more expensive, perhaps aiding the sale of U.S. goods, manufacturers say.

But Greenspan said a higher-valued yuan would likely shift more trade to other lower-cost Asian countries, not open up the floodgates for U.S. exports or create jobs at home. He noted that the increase in the U.S. trade gap with China in recent years has come at the expense of sales from other Asian nations, which would likely regain some of their market share if China were to allow its currency to move higher.

Greenspan and Snow rejected lawmakers' proposals for tariffs on Chinese imports if China does not revalue its currency. They argued such a policy would likely lead China to retaliate against U.S. goods and would harm free trade, which has led to higher living standards for most in the United States and worldwide.

But Sen. Charles Schumer, D-N.Y., who has proposed a bill that would impose tariffs after a negotiation period, said China's policies are hurting the world trading system. "They need some prodding," he said. "Getting China to play by the rules of the game is the free-trade position."

Snow said China is "ready" to allow its currency to float but it's unclear if the Chinese leaders are close to such a move.