Tags: UK | Cameron | Chinese | Imbalances | Risk | Harming | World

UK's Cameron: Chinese Imbalances Risk Harming World Economy

Wednesday, 10 Nov 2010 08:31 AM

U.K. Prime Minister David Cameron said economic imbalances, including China’s trade surplus and curbs on its currency, risk sparking protectionism and pushing the world economy into recession.

“Some countries with current-account surpluses have been saving too much, while others like mine with deficits have been saving too little,” Cameron said in a speech to students at Peking University in Beijing today. “The result has been a dangerous tidal wave of money going from one side of the globe to the other. We need a more balanced pattern.”

The prime minister, who flies to Seoul later today for the Group of 20 summit of leading economies, said greater Chinese exchange-rate flexibility “must happen,” along with increased domestic consumption.

G-20 nations including the U.S. want China to allow its currency to move more freely to help their domestic producers compete. Cameron said G-20 countries could agree to “hold each other to account” over actions to protect their own economies at the expense of others.

China posted a larger-than-forecast $27.1 billion October trade surplus today. Exports gained 22.9 percent from a year earlier and imports rose 25.3 percent, the customs bureau said.

The yuan climbed today to 6.6337 against the dollar as of 4:32 p.m. local time, close to the strongest level since 1993, on speculation the country’s central bank will permit faster appreciation before the G-20 meeting.

Import Duties

U.S. Treasury Secretary Timothy F. Geithner said Nov. 8 that it is “overwhelmingly” in China’s interest to let the yuan rise, as the House of Representatives attempts to impose punitive duties on Chinese imports.

“At the worst point of the crisis, we averted protectionism,” Cameron said. “But at a time of slow growth and high unemployment in many countries those pressures will rise again -- already you can see them. Globalization -- the force that has been powerful in driving development and bringing huge numbers into the world economy -- could go into reverse.”

He also told the students the China must do more to protect intellectual property rights if it wants to win business support abroad and play a role in an international agreement to reduce emissions of gases linked to climate change.

China, the biggest emitter, has set itself a target of cutting greenhouse gases per unit of gross domestic product by 40 percent to 45 percent from 2005 through 2020. That would still expand its total emissions because of the nation’s growth rate, London School of Economics professor Nicholas Stern said last week.

‘Fair Deal’

“China is too big and too important now not to play its part,” Cameron said. “An international deal has to be fair. And that means that countries with different histories can’t all be expected to contribute in exactly the same way. But a fair deal also means that all countries contribute and all are part of an agreement.”

Cameron said he wasn’t criticizing China for its economic success in recent decades, adding that this very success left the country more vulnerable to swings in the world economy.

The prime minister also used his speech to extol to his audience the benefits of democracy and free speech. “Ultimately we believe that they make our government better and our country stronger,” he said.

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U.K. Prime Minister David Cameron said economic imbalances, including China s trade surplus and curbs on its currency, risk sparking protectionism and pushing the world economy into recession. Some countries with current-account surpluses have been saving too much, while...
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2010-31-10
Wednesday, 10 Nov 2010 08:31 AM
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