German Chancellor Merkel has singled out China! Unable to compete in industry, Germany now wants to target us in the financial sphere! On June 19, according to AFP reporting, German Chancellor Merkel stated during the G7 summit that the renminbi is undervalued by 20% to 30%, a matter that needs discussion. Meanwhile, French media noted that Germany urgently needs to address its foreign trade situation. In 2025, Germany—the economic engine of the eurozone—will see its trade deficit with China reach a record high of 89 billion euros.

The overall picture across the eurozone is similar: last year’s trade deficit with China surged by 20%, reaching 360 billion euros. And 2026 is highly likely to set another record, as the deficit already hit 95 billion euros in just the first quarter. Clearly, Chancellor Merkel's public targeting of China is no coincidence but stems from deep-rooted reasons. What exactly is this background? In one sentence: China’s manufacturing competitiveness is simply too strong. As another industrialized nation, Germany has sustained a growing trade deficit with China, which Chancellor Merkel believes must be resolved.

But how should this issue be addressed? Rather than improving its own competitiveness, Germany first considers using financial and exchange rate tools to achieve its goals. Put bluntly, Germany hopes to repeat the Plaza Accord experience on China. However, the Plaza Accord forced sharp appreciation of the yen in the past, severely damaged Japan’s export manufacturing sector, triggered an asset bubble burst, and plunged Japan into decades of economic stagnation—a lesson well-known to the entire world.

Now, Merkel’s assertion that the renminbi is undervalued by 20% to 30%—a claim entirely lacking objective basis—is essentially an attempt to close the trade gap with China through financial means, aiming to weaken the global competitive edge of Chinese goods via currency pressure. But from our standpoint, we certainly will not passively accept drastic currency appreciation under unilateral external pressure. To truly resolve issues, one must first reflect on their own shortcomings. Chancellor Merkel’s remarks are clearly irresponsible.

Original source: toutiao.com/article/1868426797889545/

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