David Cameron urges China to embrace democracy

David Cameron has called for closer trading ties between Europe and China - but said the UK still had "deeply-held concerns" over human rights.

Growing economic freedom should go "in step" with political reform to ensure prosperity, he told Beijing students.

Acknowledging British society was "not perfect", the prime minister insisted he was claiming no "moral superiority".

Ending the UK's two-day trade mission, he urged China to further open its markets and correct trade imbalances.

Mr Cameron said it should be recognised that growing prosperity had helped give Chinese people more freedom to choose where to live and work, to blog and send text messages.

But he added: "There is no secret we disagree on some issues, especially around human rights. 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."

Mr Cameron pointed out that, were he not in Beijing, he would have been preparing for Prime Minister's Questions and suggested such scrutiny forced leaders to listen to criticism and adapt their policies in response.

'Rule of law'

"All the time the government is subject to the rule of law. These are constraints on the government and at times they can be frustrating," he told the students at Beijing University.

"But ultimately we believe they make our government better and our country stronger," he said, adding that a free media ensured people were better informed and that those with different views from the government were able to take part in public debate.

Mr Cameron said China's growing influence in world affairs gave it a vital role in international security, preventing Iran from developing nuclear weapons and helping develop Africa's economy.

He also emphasised that other nations should see China's rise as an opportunity, not a threat. However, he said that for the UK to make the case for Europe to open itself to more trade, China must also further open its markets.

China is under pressure over its low valuation of the yuan, which has helped its exports and allowed it to build up massive reserves of foreign currency.

And ahead of a G20 summit where Beijing is likely to be pressured on the issue, Mr Cameron warned this situation had created "a dangerous tidal wave of money" sweeping around the world.

Mr Cameron acknowledged that leading a country of 1.3 billion people raised difficulties of a different order from those of a nation of 60 million.

But he said: "The rise in economic freedom in China in recent years had been hugely beneficial to China and to the world. I hope in time this will lead to a greater political opening, because I'm convinced that the best guarantor of prosperity and stability is for economic and political progress to go in step together."

On Tuesday, Mr Cameron had brought up the issue of human rights during talks with the Chinese Prime Minister, Wen Jiabao.

Mr Cameron has been joined by four cabinet ministers and 43 business leaders on the trip

BBC political editor Nick Robinson said he understood Mr Cameron had also raised the case of Liu Xiaobo, the jailed dissident and Nobel Peace Prize winner, at a banquet that evening, although it was unclear how strongly.

The Chinese artist Ai Weiwei, who says he was recently put under house arrest by the Chinese authorities, had called on Mr Cameron to make a public statement about China's human rights record.

Our correspondent said the prime minister had gone "about as far as he thought he could" in his speech.

"It's not just a balancing act here when he's in China but also a balancing act between what the British public expects of him and what he feels he can deliver."

He added that the trip's success would be judged on two measures; whether it resulted in more contracts for UK firms and jobs at home, and whether the Chinese government engaged more with the West on the economy and world affairs.

Mr Cameron, who is being accompanied by four cabinet ministers and 43 business leaders, called the trip a "vitally important trade mission".

Engine maker Rolls-Royce has won a £750m ($1.2bn) contract - the biggest of the visit so far - which is to supply China Eastern Airlines with Trent 700 engines for 16 Airbus A330 aircraft, along with long-term servicing.

On Wednesday, Mr Cameron met President Hu Jintao and took time out to visit the Great Wall of China, before flying to the G20 summit in South Korea.