By Benjamin Kang Lim

BEIJING (Reuter) - China's Communist Party has formed a high-level group to take a close look at the U.S. Congress which Chinese leaders see as a thorn in its often troubled ties with Washington, sources close to the party said this week.

The Central Leading Working Group on the U.S. Congress was formed late last year, with Communist Party chief Jiang Zemin as its head, one Chinese source with ties to the party said.

The group will answer directly to the party's omnipotent seven-strong Politburo Standing Committee, of which Jiang is a member, the source said.

"In the past, China thought it only had to deal with the (U.S.) Administration. Now it knows there's a need to better understand the U.S. Congress," said the source who spoke on condition of anonymity.

The group would seek to "study and understand" the U.S. Congress, he said.

China's leaders have come to regard the U.S. Congress as a recurrent irritant in bilateral ties.

Congress has repeatedly slammed China over a range of issues, ranging from trade, recognition of Taiwan, unrest in Tibet and alleged human rights abuses.

The U.S. Congress was instrumental in Washington's decision last year to issue a visa to the president of China's rival, Taiwan. Taiwan President Lee Teng-hui's landmark private visit to the United States last June saw Beijing's relations with Washington and Taipei plunge to their lowest level in years.

Beijing has regarded Taiwan as a renegade province since the end of the Chinese civil war in 1949 and seeks to push the island into diplomatic isolation. China has threatened to invade if Taiwan declared independence.

It angrily postponed unofficial talks with Taipei last year and conducted two series of missile tests in the sea north of Taiwan in July and August, shaking business confidence and financial markets.

The new group's working relationship with the Foreign Ministry had not yet been determined, the source said.

However, another Chinese with party links said the foreign affairs committee of the National People's Congress, or parliament, would answer to the group, he said.

The Communist Party and the U.S. embassy in Beijing declined to comment.

A Western diplomat said visiting U.S. dignitaries had urged their Chinese hosts to try to better understand the U.S. system.

"There's a greater need for the Chinese to understand the U.S ... especially after Taiwan's success," the diplomat said referring to President Lee's visit last June.

China's relations with the United States have seesawed in recent years. The United States agreed Wednesday to withdraw a military attache, accused by Beijing of spying in south China.

In another recent spat, China voiced its displeasure over Washington's recent decision to issue a transit visa to Taiwan Vice President Li Yuan-zu.

Western diplomats said China's anger was more muted than the rage it vented when Washington issued a visa to the Taiwan president last year.

Last week, China's two most powerful leaders, President Jiang and Premier Li Peng, urged the United States not to jeopardize improvements in ties by violating its commitment to recognize Beijing as the sole government of China.

REUTER