Cameron urges China to move on FX flexibility

BEIJING (Reuters) - Prime Minister David Cameron urged China Wednesday to move towards greater flexibility in its exchange rate, saying it was vital for the future growth of the recovering world economy.

“China is already talking about moving towards increased domestic consumption, better healthcare and welfare, more consumer goods as its middle class grows, and in time introducing greater market flexibility into its exchange rate,” he said.

“This cannot be completed overnight, but it must happen,” Cameron told students at the elite Peking University.

“Let’s be clear about the risks if it does not ... At the worst point of the crisis, we averted protectionism. But at a time of slow growth and high unemployment in many countries those pressures will rise again. Already you can see them,” he added.

“Countries will increasingly be tempted to try to maximise their own growth and their own employment, at the expense of others.

“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.”

The United States and others have cajoled China to allow its yuan currency to rise faster and accuse Beijing of keeping it undervalued to gain a trade advantage.

Reporting by Keith Weir; Writing by Ben Blanchard; Editing by Ken Wills