The greatest danger facing the global economy is a return to trade protectionism, Angela Merkel, German chancellor, has warned ahead of this week’s meeting of global leaders in Seoul.

In an interview with the Financial Times before the G20 summit opens on Thursday, Ms Merkel suggested China must be persuaded with “facts and benchmarks” to set a “fair exchange rate” for the renminbi, rather than be attacked for its currency policy.

Exchange rates should reflect the underlying strength of a country’s economy, she said. At the same time, she dismissed a US proposal to set specific targets for maximum levels of balance of payments’ surpluses and deficits as “too narrowly conceived”. Germany has been under attack for the size of its trade surplus.