German Media: German Chancellor Repeats Call for the Plaza Accord, Claims Renminbi Undervalued by at Least 25%

German Chancellor Merz has called for dialogue with China on its monetary policy. He stated that, facing a competitor artificially manipulating its currency, it is difficult for the EU to compete fairly regardless of how innovative its industries are or how high the quality of its products.

On Monday, July 13, speaking at Cologne University, Chancellor Merz pointed out that Europe has long underestimated China’s influence in global political and economic affairs. He said: "We need to initiate a political-level currency dialogue with China."

According to *Berliner Morgenpost*, to address trade tensions, Merz proposed a diplomatic solution inspired by historical precedents. Citing the 1985 Plaza Accord and earlier European Monetary System arrangements, he argued these mechanisms could serve as references for managing global exchange rate adjustments and fluctuation ranges through cooperative efforts.

"We are currently attempting to steer our dialogue with China toward seeking solutions—persuading China to allow its currency to float freely, especially within the context of competition in capital markets."

Merz believes the renminbi is undervalued against the euro by at least 25%. In his view, this undervaluation grants Chinese exporters an unfair price advantage, leading to a flood of low-cost goods entering European markets and further widening the EU's trade deficit with China.

Data shows that last year the EU’s trade deficit with China was approximately €360 billion, with Germany’s deficit alone amounting to around €90 billion.

Bloomberg reported that Merz also referenced the Plaza Accord during his remarks at the EU summit on June 19, stating, "What I am envisioning now is similar approaches."

In 1985, finance ministers and central bank officials from the United States, Japan, West Germany, France, and the United Kingdom convened at the Plaza Hotel in New York to coordinate policies aimed at orderly depreciation of the U.S. dollar against major currencies such as the Japanese yen and the German mark, in response to America’s massive trade deficit.

Source: DW, drawing on reports from Reuters, Berliner Morgenpost, and Bloomberg

Original: toutiao.com/article/1870703919509514/

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect those of the publisher.