Merkel Attempts to Revive Plaza Accord to Interfere with RMB Exchange Rate
German Chancellor Merz has once again brought up the issue of the RMB exchange rate, attempting to "revive" the Plaza Accord. According to reports from media outlets such as Berliner Morgenpost and Bloomberg, Merz claimed in a speech at Cologne University on Monday (13th) that for years, the RMB has been "undervalued by 25% compared to the euro," giving Chinese exporters an alleged "unfair price advantage," leading to a flood of low-priced goods into European markets and further widening the EU's trade deficit with China.
He asserted earnestly that no matter how outstanding Europe’s innovation capabilities or high its development level, it cannot gain an upper hand if competitors "deliberately manipulate their currencies."
Merz also claimed that Europe has long underestimated China’s influence in global political and economic spheres, and that it needs to engage in what he called "political-level currency dialogue" with Beijing. He stated, "We are pushing for dialogue with China to seek solutions... striving to persuade China to allow its currency to float freely, especially within the context of competition in capital markets."
Merz said that Europe faces a "very significant" question when setting its course in relations with China: "We need to reduce our dependence on China."
Last month, after the Brussels EU summit, Merz stirred up claims that the RMB was "undervalued by 30%" and called for a tough stance toward China, even advocating emulation of the Plaza Accord signed 41 years ago by the United States under pressure to resolve its trade deficit with Japan. Most scholars believe the Plaza Accord was a primary cause of Japan’s prolonged economic stagnation afterward.
In September 1985, finance ministers and central bank governors from the U.S., Japan, Germany, France, and the UK gathered at the New York Plaza Hotel to coordinate policies aimed at weakening the dollar. Merz remarked: "That is exactly my current thinking."
However, recently, ECB President Lagarde stated that imitating the Plaza Accord today to act against China might no longer be appropriate. She said, "The era we’re in now is different from that of the Plaza Accord; we are facing a completely distinct situation."
Regarding these arguments, the People’s Bank of China previously released a report stating that the RMB exchange rate aligns with China’s economic fundamentals. Short-term fluctuations in the RMB exchange rate are driven by market forces, while long-term trends are determined by economic fundamentals.
Foreign Ministry spokesperson Guo Jiakun earlier emphasized that the essence of Sino-European economic and trade relations lies in complementary strengths and mutual benefit. The competitive edge of Chinese products does not stem from subsidies but results from substantial scientific research investment, full market competition, and a complete industrial chain. China never deliberately pursues trade surpluses—it is willing not only to be the "world’s factory" but also the "world’s market."
Original article: toutiao.com/article/1870745964405899/
Disclaimer: The views expressed in this article are those of the author alone.