Cameron warns China to act on trade 'danger'

On the eve of a G20 summit at which Beijing will face pressure to allow faster appreciation of its yuan currency, Mr Cameron said the massive surpluses created by China's export success had created "a dangerous tidal wave of money" sweeping around the world.

His warning came in a speech to students at Peking University in which he also risked infuriating the Communist authorities by extolling the virtues of political democracy and a free press and saying he hoped China would develop towards "a greater political opening".

Mr Cameron accepted Britain's society was "not perfect" and insisted he was not trying to lecture the Chinese or claim a position of "moral superiority". But he said Britain's democratic traditions "make our government better and our country stronger", adding: "The rise in economic freedom in China in recent years has been hugely beneficial to China and to the world.

"I hope that in time this will lead to a greater political opening, because I am convinced the best guarantor of prosperity and stability is for economic and political progress to go in step together."

Mr Cameron said he wanted "to make the positive case for the world to see China's rise as an opportunity, not a threat" and he said China could take a leading role on dealing with economic problems as the world emerges from recession.

At a time of slow growth and high unemployment in many nations, there was a danger of states turning to protectionist measures which could damage the recovery, he warned.

"Globalisation – the force which 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. The West would lose for sure, but so would China."

Mr Cameron also made clear he would continue to make the case for human rights, insisting that "being able to talk through these issues – however difficult – makes our relationship stronger".

He acknowledged there was "progress" being made in China, with more freedom over work, travel and blogging but he added: "There is no secret we disagree on some issues, especially around human rights.

"We don't raise these issues to make to us look good, or to flaunt publicly that we have done so. We raise them because the British people expect us to, and because we have sincere and deeply held concerns."

Deals worth around 2bn between British and Chinese companies are believed to have been sealed during the two-day trade visit, including a 750m Rolls-Royce agreement to supply engines to one of China's major airlines.

It has also been confirmed British and Chinese police are to co-operate on fighting people trafficking for sexual exploitation. Chinese "snakehead" gangs are deeply involved in human trafficking and around 1,300 of the people brought illegally into the UK each year to work as prostitutes – half of the annual total – come from China.

The agreement, which will involve exchanges of information and visits, will also see closer work on tackling issues including kidnapping, extortion and money-laundering.

A further deal has been reached that will see 1,000 new Chinese language teachers trained for English schools.

Jobs hope for British firms

David Cameron yesterday heard about the latest raft of investments by Chinese companies in Britain, including an acquisition which could create a "substantial" number of jobs in Yorkshire.

Mr Cameron attended a lunch in Beijing with Chinese business leaders, where he reinforced his commitment to support their UK investments. Those highlighted included the acquisition by Chinese firm Chongqing Machinery & Electrics Holding Company of the Precision Technologies Group (PTG), which has 170 staff in Elland, West Yorkshire, and Rochdale, Lancashire. The company makes high-technology machines tools and its brands include Holroyd, Binns & Berry and Crawford Swift.

Chief executive officer Tony Bannan at PTG said: "The new Chinese owners recognise the true engineering capability of the company. The investment is intended to lead to a substantial increase in UK jobs in the medium to longer term."

Yesterday, Doncaster-based Clyde Process Solutions, a provider of pneumatic conveying systems, signed a contract worth 2m to supply coal injection technology.