[Source/Observer Network, Ruan Jiaqi]

In 2025, it will be the 40th anniversary of the signing of the Plaza Accord. As a product of Japan's forced compromise with the United States during the height of US-Japan trade friction, the signing of this agreement is widely regarded as an important node when Japan's economic development "plummeted," and also one of the key reasons why Japan began its "lost 30 years" in the late 1990s, leaving behind sufficiently painful historical lessons for countries around the world.

Now, history seems to be repeating itself with alarming similarity. The American Trump administration has made no secret of its protectionist and unilateralist rhetoric and actions, showing a clear intention to replicate the "Plaza Accord" and suck blood from other countries to fatten itself up.

The so-called "reciprocal tariffs" it advocates stem from the "Mar-a-Lago Accord" crafted by Stephen Miran, Chairman of the White House Council of Economic Advisers (CEA). This economic plan, which the Trump administration considers its "economic bible," is almost identical to the original Plaza Accord, attempting to force other countries to make economic concessions favorable to the United States through tariffs and exchange rate adjustments.

As concerns about the imminent arrival of a second "Plaza Accord" grow within the international community, on April 17, former Governor of the Bank of Japan and visiting professor at Aoyama Gakuin University, Kiyohiko White, wrote an article in the Nikkei Asia pointing out that unlike Japan back then, China, now the main target of U.S. pressure, has long been well aware of the "fatal" nature of agreements like the Plaza Accord and will not repeat Japan's mistakes.

In his article, he analyzed that "China has long studied Japan's economic development experience, particularly its transformation from high-speed growth to stable growth. One lesson China has drawn from this is that signing documents similar to the Plaza Accord would be a fatal error for sound economic management. This understanding seems to have deeply permeated China's policy-making process."

White further emphasized that resisting external coercion is not only about economic interests but also reflects national sovereignty. More importantly, unlike Japan, China does not rely on the United States in terms of national security, making it more difficult for the United States to coerce China into submission through threats.

On April 27, 1987, Tokyo, Japan, Stock Exchange, a bank clerk shows the new exchange rate on the notice board. At this time, the dollar fell to its lowest level since the war. Visual China.

In 1984, burdened by fiscal deficits, trade deficits, and the appreciation of the dollar, the United States attempted to impose import restrictions and other trade protectionist measures on Japan, demanding that Japan reduce tariffs on 144 types of goods, address trade imbalances in telecommunications equipment, and expand imports of American products. To reduce its trade surplus with the U.S., Japan promised to increase imports of American products and promote financial liberalization.

To address America's massive trade deficit, under the planning of the U.S. government, in September 1985, finance ministers and central bank officials from the U.S., Japan, the U.K., France, and Germany held the "Plaza Meeting" at the Plaza Hotel in New York. They reached an agreement on coordinating their monetary policies and orderly reducing the value of the dollar against major currencies.

However, this agreement only lasted less than two years. Due to excessive devaluation caused by joint intervention, in February 1987, six countries including Canada hastily signed the Louvre Accord in France to prevent the decline of the dollar's value and stabilize the international monetary market centered on the dollar.

White believes that the recovery of the U.S. economy since the late 1980s had nothing to do with the Plaza Accord but benefited from the rise of innovative U.S. IT companies. A service trade surplus was precisely a symbol of America's economic strength and vitality.

"For the United States, the Plaza Accord ultimately became meaningless, and the U.S. did not pay any price for it," White continued, "but for Japan, the cost was painful."

He analyzed that after the Plaza Accord was signed, in order to fulfill promises to boost domestic demand and reduce trade surpluses, Tokyo implemented long-term monetary easing policies. The yen appreciated significantly, causing Japan's domestic economic bubble to rapidly expand. Ultimately, due to the collapse of the real estate bubble, Japan experienced decades of prolonged economic stagnation.

White wrote, "Looking back, the Plaza Accord was a stumbling block for Japan's economy."

When analyzing the reasons why Japan accepted this unfair agreement at the time, White believed that one reason was that the Japanese government misunderstood economic laws at the time. Trade imbalance was not just a surface-level issue of import-export imbalance but essentially related to structural trends in foreign exchange gaps and savings-investment gaps (I-S). Japan had a positive gap (savings greater than investment), while the U.S. had a negative gap.

Secondly, and more crucially, according to White, Japan relied on the U.S. for national security and fundamentally could not directly refuse U.S. demands. This is also an important reason why China today cannot repeat Japan's mistakes.

Returning to the global tariff war initiated by the U.S. today, White pointed out that the U.S. seemed still unwilling to address the essential I-S gap problem and persisted in reducing commodity trade deficits through the return of manufacturing, which does not actually serve U.S. fundamental interests. He argued that, in fact, the U.S. is most competitive in non-manufacturing sectors, and an increase in manufacturing output necessarily means a decrease in non-manufacturing output.

How can the current situation be changed? The first possibility is rational persuasion of Trump. White candidly admitted that this possibility is slim. What disappointed him even more was that few business leaders in the U.S. publicly voiced opposition to his policies, and even scholars became increasingly cautious when expressing their views.

The second possibility lies in hoping that market reactions will force Trump to change his policies. White believed that realistically speaking, this might be the only way to change his policies. Indeed, rising U.S. Treasury yields forced Trump to delay reciprocal tariffs by 90 days.

Despite the recent resurgence of discussions about "deglobalization," White emphasized that there is one fact beyond doubt: the interdependence among countries will continue. He stated that regardless of how difficult the current situation may be, people must strive to avoid the disaster of the Great Depression of the 1930s from recurring.

This article is an exclusive contribution by Observer Network and cannot be reproduced without permission.

Original source: https://www.toutiao.com/article/7494874903309648393/

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