April 15 (Bloomberg) -- Barack Obama and Hillary Clinton escalated their war of words over who is more in touch with average Americans even as they displayed agreement on economic and trade issues.

The two Democratic presidential candidates, in separate appearances yesterday before a labor and business group in Pittsburgh, accused China of manipulating its currency, dumping goods into the U.S. market and violating intellectual property rights.

Both extended criticism of China to President George W. Bush's fiscal policies, saying the U.S. was now so in debt that China had become a powerful ``banker'' for the country.

Clinton, a New York senator, also used the event to renew her efforts to capitalize on a comment by Obama earlier this month that economic woes have led some working-class voters to get ``bitter and cling to guns or religion or antipathy to people who aren't like them.''

``I don't think he really gets it that people are looking for a president who stands up for you and not looks down on you,'' she said yesterday. Her comments drew boos and groans from some in the audience.

Obama, an Illinois senator, dismissed the controversy as ``the latest distraction of the week'' and defended his remarks.

`Angry and Frustrated'

Many Americans ``are angry and frustrated with their leaders for not listening to them, for not fighting for them, for not always telling them the truth,'' he told the Associated Press annual meeting in Washington yesterday. ``And yes, they are bitter about that.''

His campaign, meanwhile, drew parallels to comments Clinton's husband, Bill, made in 1991 when he was running for president and accused Bush's father, incumbent George H.W. Bush, of using divisive campaign tactics.

``You find the most economically insecure white people and you scare the living daylights out of them,'' Bill Clinton said, according to a 1991 report in Time Magazine.

Bill Clinton also told the Los Angeles Times that the elder Bush's tactics worked because ``you have all these economically insecure white people who are scared to death.''

``It really underscores the political nature of the attacks that are coming down,'' Obama's chief strategist, David Axelrod, told reporters yesterday en route to Obama's Washington speech.

Firestorm Over Remarks

Obama's comments, to an April 6 fundraiser in San Francisco, surfaced in news reports April 11. The firestorm over his remarks comes as he and Hillary Clinton are competing for votes from gun- owners, bowlers, and church-goers.

``He said that they cling to religion and guns and dislike people who are different,'' Clinton said yesterday in her Pittsburgh remarks to the Alliance for American Manufacturing. ``Well, I don't believe that. I believe that people don't cling to religion, they don't cling to guns, you enjoy hunting or collecting or sport shooting.''

Clinton, 60, last night began airing a 30-second TV ad in Pennsylvania featuring small-town-voter reaction to Obama's remarks and plans to continue hammering the issue to voters.

``The ad is a set of reactions from our supporters that I think mirrors the reactions of many Pennsylvanians,'' Clinton adviser Howard Wolfson told reporters today.

Senator John McCain of Arizona, the presumptive Republican nominee, also took shots at Obama and quickly began using the ``bitter'' remark to raise money.

`Fundamental Attitude'

``It shows a fundamental attitude about the heartland of America. He basically says that it is economic issues that shape their values and the things that they believe in,'' McCain, 71, told reporters yesterday.

``And the fact that he continues to say, that he does not apologize for those remarks, I think indicates a certain out-of- touch elitism,'' McCain said.

In a fundraising e-mail sent out yesterday, McCain campaign manager Rick Davis said Obama's comments ``expose the out-of- touch beliefs to which John McCain offers stark contrast.''

Obama, 46, said over the weekend that his phrasing was ``clumsy,'' yet stood by his point.

``The notion that people are surprised and I am out of touch because I spoke honestly about people's frustrations, that tells me there's some politics going on,'' Obama said April 13 in Steelton, Pennsylvania.

His campaign also tried to turn his comments into cash. ``Our opponents have been spinning the media and peddling fake outrage around the clock,'' Obama campaign manager David Plouffe wrote in an e-mail.

Clinton Booed

The sparring drew criticism as some in Clinton's Pittsburgh audience booed her remarks yesterday.

``She came out with negativity instead of something positive,'' said one of them, Dorothy Jackson, 58, a retired food-service worker.

Otherwise the Democrats were generally in synch during the manufacturing forum.

Obama said he would modernize the country's steel industry and open markets for American goods. He also said he doesn't oppose all trade deals and supports agreements that have strong protections for workers and the environment.

Clinton said she would strengthen enforcement of existing trade laws and pledged once again to renegotiate the North American Free Trade Agreement, which her husband pushed through Congress and signed into law as president.

To contact the reporters on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net; Kristin Jensen in Pittsburgh at kjensen@bloomberg.net

Last Updated: April 15, 2008 11:57 EDT