CBI Director-General Richard Lambert, whose body represents companies such as Barclays, BP, GlaxoSmithKline and thousands of others, said that his members opposed any new trade barriers against China.

"When you see the US Congress talking about trade barriers against China and China using the language they are in return, and the Brazilian finance minister talking about trade wars, it all gets a bit scary," he told Reuters in an interview.

Finance ministers and central bankers from the Group of 20 top developed and emerging economies are now meeting in South Korea to discuss how to manage currency, trade and macroeconomic imbalances ahead of a leaders' meeting in Seoul next month.

US proposals for numerical targets for countries' trade deficits and surpluses have already run into stiff opposition, prompting doubts that an accord will be reached on rejecting currency devaluations.

Lambert, a former editor of the Financial Times and one-time Bank of England policymaker, said the impact of currency strength on export performance had lessened during his lifetime due to ever more complex global supply chains.

"You should have more things on the table than just the exchange rate," he said in the interview at the CBI's central London headquarters. "If you just go nose to nose on the renminbi rate you are not going to get very far."

He backed proposals by BoE Gov. Mervyn King for a "grand bargain" between major economies on exchange rates, rules for capital flows and realigning domestic demand to put the recovering global economy on a surer footing.

King had warned of a risk of return to 1930s-style protectionism with ruinous consequences in a speech on Tuesday.

"The cohesion that came through at the time of the G20 in London (last year) does seem to be dissipating and that gets quite risky," Lambert said.

Britain's exporters have had few reasons to complain about the exchange rate as sterling has fallen by a quarter on a trade-weighted basis since mid 2007.

To date this decline has led to little improvement in Britain's trade deficit.

Lambert attributed this in part to exporters opting to boost profit margins and cashflow in the financial crisis, rather than seek higher market share. But he forecast a positive net contribution to British GDP from foreign trade in 2011.

He reiterated the CBI's broad support for the hefty public spending cuts detailed in finance minister George Osborne's spending review on Wednesday, but criticized a bank levy planned to bring in 2.5 billion pounds ($3.95 billion) a year.

"I worry about bank levies because I think that they will be paid for by their customers," he said. "The shape of lending will be more subdued than would otherwise have been the case," though he said the immediate extra impact would be small as many banks had anticipated such a charge.

Overall, the fiscal tightening would enable the BoE to maintain its ultra-loose policy framework, though he doubted a majority of members would join Monetary Policy Committee member Adam Posen and vote for more quantitative easing next month.

"The economy is doing rather better right now than many people thought likely a few months ago, and inflation is rather higher than the MPC forecast," Lambert said. "The way I read the minutes is they don't seem as if the MPC is preparing us for a renewed burst of quantitative easing next month."