Tidal wave of money to the east will hit recovery, David Cameron warns China

Memorable moment: David Cameron at the Great Wall of China
12 April 2012

David Cameron today warned of a "dangerous tidal wave of money" from west to east that could drown the global recovery from recession.

The Prime Minister ended his China tour with a double-edged warning to his hosts to open their markets or risk their burgeoning economic might becoming a liability to world prosperity.

As he left for the G20 summit in South Korea, where he pledged to champion free trade, Mr Cameron displayed concern at the low level of the yuan currency, which Beijing is suspected of holding down to boost exports and hold back imports.

Mr Cameron said the world economy would only grow strongly again if everybody embraced open markets. "The truth is that some countries with current account surpluses have been saving too much while others like mine with deficits have been saving too little," he said.

"And the result has been a dangerous tidal wave of money going from one side of the globe to the other."

The Premier urged a "more balanced pattern" of trade. Arguing that no economy could afford to insulate itself, he pointed out that the world downturn had led to a 12 per cent fall in Chinese exports and the loss of some 20 million export sector jobs in China. Speaking in Beijing, Mr Cameron lauded the surging Chinese economy, saying the country had regained its place as the biggest global economic power. It was now time for China to show leadership on trade.

He offered to champion Chinese access to European markets and combat protectionist policies elsewhere, but said in return that China must be "open to Europe".

The Prime Minister set out a strongly pro-free trade British agenda for the G20 which opens tomorrow. "Countries will increasingly be tempted to try to maximise their own growth and their own employment, at the expense of others," he warned.

"Globalisation — the force that has been so powerful in driving development and bringing huge numbers into the world economy could go into reverse. If we follow that path we will all lose out."

In his address to students at Peking University, Mr Cameron risked irritating the Beijing leadership by hailing the political freedoms of British democracy as an example to follow.
"There is no secret we disagree on some issues, especially around human rights," he said. "We don't raise these issues to make us look good, or to flaunt publicly that we've done so. We raise them because the British people expect us to — and because we have sincere and deeply-held concerns."

At a banquet with Premier Wen, he raised individual cases including that of Liu Xiaobo, the Nobel Peace Prize winner sentenced to 11 years in prison for urging political reform.

There was amusement among the British party when in a question-and-answer session with the students, one attacked the Coalition decision to raise tuition fees for students. She said it could lead to fewer foreign students coming in Britain. Mr Cameron said higher fees "will make sure our universities are well funded". Rows over China's record on human rights continued as Mr Cameron departed.

But he refused to condemn his hosts in public, which would have wrecked the main aim of his tour, the biggest trade delegation ever to China, involving 43 business leaders. Deals worth around £2 billion between British and Chinese firms are believed to have been sealed during the two-day visit, including a £750 million Rolls-Royce agreement to supply jet engines.

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