* UK coalition govt says surplus nations must play part
* Osborne says deficit countries must act on borrowing
* Chinese raised euro zone concerns with UK (Adds comments on China's handling of crisis, future plans)
By Emma Graham-Harrison
BEIJING, June 3 (Reuters) - China's yuan currency should be looked at as part of a wider set of imbalances in the global economy, which will be discussed at this week's G20 meeting, British finance minister George Osborne said on Thursday.
China came under renewed pressure to let the yuan appreciate on Wednesday when a letter obtained by Reuters showed the United States government was considering investigating whether its strict currency policy created an illegal trade subsidy.
The Asian powerhouse has said it is committed to currency reform, but at its own pace, and argues that the stability of its currency contributed to the world's recovery from the financial crisis.
"The currency needs to be seen in the broader context of the broader imbalances in the world," Osborne said when asked about the yuan during a trip to China before the June 4-5 meeting of finance ministers and central bankers in Korea.
"Countries with high budget deficits need to make sure they can deal with those deficits. Surplus countries also need to play their part contributing to global growth and that will be one of the big topics for discussion in South Korea."
Osborne's comments are his first on the explosive topic since the Conservative-Liberal Democrat coalition took office in May.
They may cheer emerging market economies, which are concerned that the onus for adjustment of global imbalances will fall unfairly on them. Brazilian finance minister Guido Mantega recently blamed a weak dollar and low U.S. interest rates -- not an undervalued yuan -- for many of the world's woes.
Western nations, eager to rebalance their economies
following the financial crisis, argue China's foreign exchange
policy gives it an unfair advantage in global trade. Many
economists believe the yuan
But Osborne said China had managed its economy well during recent global turmoil and he hoped it was readying to take on a larger world leadership role in financial and political affairs.
"If you look back over the last couple of years you could fault many economies for what has happened, but actually China has handled itself pretty well," he said at the end of his stay in Beijing, his first trip beyond Europe in his new post.
"China is an absolutely key economic leader in the world (and) I want it to play a bigger role in key economic forums like the IMF and the G20, and indeed a bigger role in terms of general global leadership," he said, referring to issues like climate change and tensions with Iran over its nuclear programme.
EURO ZONE CRISIS
Osborne, a deficit hawk, said China had raised their concerns about the euro zone fiscal crisis with him during meetings.
Policymakers across Europe are tussling with how to bring down bloated government borrowing without harming economic recovery after the global downturn.
Osborne said that, while immediate liquidity problems had been addressed, questions remained over whether heavily-indebted countries would be able to push through necessary budget cuts.
"There's clearly a lot of Chinese concern about the euro zone," he said. "There are broader issues about fiscal sustainability, about the ability of high deficit countries in the euro zone to tackle those problems."
Osborne said it was in "in everyone's interests around the world that those countries do that," and added that he hoped it would be discussed at the G20.
Osborne, eager to introduce some form of bank levy perhaps as soon as his first budget on June 22, said he wanted swift, co-ordinated action from the G20 on financial reform.
"One of the things I'll be pushing for at the G20 is that the agreements that were come to last year that we would develop global standards ... are now made more concrete," he said.
"Of course there will be a period of transition for banks but we want to end the uncertainty about what those standards are going to be and the sooner we can do that the better."
For more stories on the G20 meeting, click [ID:nSGE64R00R]
(Reporting by Emma Graham-Harrison, Writing by Matt Falloon; Editing by Toby Chopra & Kim Coghill)