Recently, German politician Merz claimed that the renminbi is "undervalued by 30%" and called on the EU to adopt a tough stance toward China, even advocating for emulating the Plaza Accord signed 41 years ago by the United States to pressure Japan over trade deficits.

In response, European Central Bank President Lagarde stated: "The times have changed. We are now in a completely different situation."

Merz's assertion that the renminbi is "undervalued by 30%" far exceeds the International Monetary Fund’s (IMF) estimate of 15% to 16%. By propagating such an exaggerated figure and pushing for a repeat of the Plaza Accord, Merz essentially attempts to shift blame for Europe’s current manufacturing challenges—such as soaring energy prices, insufficient innovation investment, and sluggish industrial policy—onto external factors. By labeling the renminbi’s exchange rate, he seeks to scapegoat China for internal structural issues. This is not a rational economic solution but rather an outlet for domestic political pressures.

Lagarde’s clear statement that "the times have changed" rests on two core arguments:

Historical Lessons: Although the 1985 Plaza Accord forced a sharp appreciation of the yen, it failed to resolve America’s trade imbalances. Instead, it led Japan into prolonged economic stagnation. Lagarde understands that a single currency policy cannot address complex trade imbalances, and blindly imitating past approaches risks repeating historical mistakes.

Call for Multilateral Dialogue: Lagarde advocates including China in G7 discussions on currency valuation, urging China to “sit at the negotiating table.” This reflects her preference for multilateral frameworks over unilateral pressure or extreme confrontation—demonstrating a relatively professional economic rationality.

Lagarde’s public rejection of Merz’s proposal is not an isolated position but rather a reflection of deep divisions among the 27 EU member states regarding China policy.

Represented by politicians from Germany and France, countries heavily impacted by Chinese competition advocate using trade defense tools or exchange rate leverage to exert pressure.

By contrast, countries such as Spain and Hungary, whose economies are deeply intertwined with China (e.g., Spanish Prime Minister Sanchez explicitly referred to China as a “potential ally”), oppose trade restrictions lacking compensation mechanisms.

This conflicting interest landscape has prevented the EU from reaching consensus on aggressive trade actions against China during recent summits, forcing related measures to be postponed.

The core reason Lagarde emphasizes that “the current situation is entirely different” lies in the fact that China is no longer Japan of 1985.

China possesses independent sovereignty, a fully developed national defense system, a massive domestic market, and the world’s most complete industrial supply chain.

The renminbi’s exchange rate mechanism follows its own logic and aligns with China’s economic fundamentals. China will never accept any attempt to use exchange rates as a pretext for suppression, nor will it return to an era of power politics dictating the fate of a few nations.

In summary, this uproar surrounding the “Plaza Accord” represents a concentrated outburst of anxiety within Europe’s manufacturing sector. Lagarde’s remarks have set a professional and rational boundary for this geopolitical contest, indicating that political impulses cannot easily translate into actual confrontational policies. In the face of global supply chain restructuring, the world does not need a new Plaza Accord—what is needed instead is mutual respect, self-reform, and open cooperation between China and Europe.

Original article: toutiao.com/article/1868766786410508/

Disclaimer: The views expressed in this article are solely those of the author.