The U.S. began to claim that the RMB is "seriously undervalued," seeking to implement the "Mar-a-Lago Agreement."
Not long ago, the mainstream view in the U.S. economics and financial circles was that the RMB would "fall as much as possible" because of the tariff war pressure in 2025, and the RMB needed to depreciate in response. Major investment banks gave predictions such as 7.5, 8.0, etc. However, this time the RMB did not depreciate, but instead appreciated against the dollar. The reason is that the U.S. couldn't withstand the tariff war, China won without needing to devalue, and the RMB has already been undervalued.
Now, global public opinion has suddenly shifted to "RMB undervaluation," especially after the trade surplus exceeded $1 trillion in 2025 (a total of $1.19 trillion), the data was indeed shocking. On January 30, the U.S. Treasury stated in its semi-annual report that "the RMB is seriously undervalued" and called on the Chinese government to "allow the RMB exchange rate to strengthen timely and orderly in a way that conforms to the macroeconomic fundamentals." Although the wording was tough, the report did not formally designate China as an "exchange rate manipulator," but instead placed it in the "monitoring list" along with Japan, South Korea, China Taiwan, Singapore, Vietnam, Germany, Ireland, and Switzerland (Thailand was added to the list). This indicates that currencies in East Asia and Southeast Asia are undervalued, with the yen and RMB being the main targets.
Institutions such as Goldman Sachs, IMF, and Brookings Institution estimated that the RMB is undervalued by 25%, 8.5%, and more than 20%, respectively. The Chinese position is that the $1 trillion trade surplus is due to the fact that China's manufacturing industry has upgraded from traditional goods to technology-intensive industries, and the enhanced international competitiveness is the main cause of the expansion of the trade surplus, not the exchange rate. Obviously, China will have its own rhythm, and even if it appreciates, it will be extremely slow, such as 5% per year. The consensus between China and the U.S. is that the appreciation or depreciation of the RMB is controlled by the Chinese authorities. We do not deny this point, but we say that appreciation must follow our requirements, as there are many concerns in the financial aspect, and rapid appreciation may cause significant shocks.
The Plaza Accord between the U.S. and Japan had a huge influence, and Japan's challenge to the U.S. seemed to disappear. At the end of 2024 to the beginning of 2025, the international financial market widely discussed a policy concept named after Trump's Mar-a-Lago, seen as an important framework of Trump's economic strategy for his second term, also known as the "Plaza Accord 2.0." The Mar-a-Lago Agreement was proposed by Stephen Miller, the chairman of the White House Council of Economic Advisers (CEA). The means were a strategic depreciation of the dollar, pushing the dollar to depreciate by 20%-30% against major trading partner currencies (euros, yen, RMB, etc.). Miller's core argument was that the dollar's reserve currency status caused its long-term overvaluation, leading to the hollowing out of American manufacturing and a massive trade deficit. The accompanying operations were debt restructuring of U.S. bonds, with interest rates reduced to near zero, and foreign governments exchanging high-interest U.S. bonds for zero-interest ones, reducing the U.S. burden. Then there was tariff and trade restructuring, with a tiered tariff system globally, which has already been implemented.
This "Plaza Accord 2.0" has reasonable parts, as the dollar is overvalued, so its depreciation is inevitable, and the RMB's appreciation is indeed a direction. However, this agreement requires foreign countries to convert $8 trillion in U.S. bonds into zero-interest ones, holding them for 100 years, which is an unreasonable demand. Also, the tiered tariffs are all one-sided bullying actions.
Therefore, the appreciation struggle will be: it can appreciate, but not according to your method. For example, if the U.S. forces China to appreciate by 20% in a year, those related to interests will inevitably take early positions to speculate and profit, making financial impact difficult to control. China will require the RMB to "fluctuate in both directions," such as when China was much weaker than the U.S. from 2005 to 2013, it agreed to appreciate, but there were annual talks between China and the U.S., saying that the appreciation would be 5% at the end of the year, and it would never exceed. Later, the U.S. changed to pressuring China, trying to crash the Chinese economy, and the talks disappeared, turning into a big fight, with the RMB's significant depreciation seen as a sign of victory, and this matter was no longer mentioned.
Now, China and the U.S. should restore the dialogue mechanism, but the balance of power has reversed. Therefore, the result will inevitably be that China appreciates at its own pace, and it will not suddenly appreciate significantly. Moreover, it will make it difficult for outsiders to profit from it, and those who bet will face reverse operations, striking financial rentiers. The so-called "Plaza Accord 2.0" cannot be established at all. Because the U.S. can act as a suzerain to command Japan, but China makes completely free decisions.
Original: toutiao.com/article/1855799259917532/
Statement: This article represents the personal views of the author.