Foreign Media: A simplistic idea is gaining traction in Western political circles: forcing the renminbi to appreciate by emulating the 1985 Plaza Agreement could reverse China’s manufacturing competitiveness.
However, analysis indicates that such measures would have extremely limited effect. According to the latest report from McKinsey Global Institute, in ten major industrial sectors—including nuclear energy, electric vehicles, and monoclonal antibodies—China is the world’s lowest-cost producer in seven of them, with average production costs just 58% of those of Western countries’ closest competitors; even with a 25% renminbi appreciation, China’s production costs would rise by only about 14%, narrowing the gap by merely a quarter.
China’s advantage stems not only from low labor costs (wages at one-quarter to one-half of those in the United States), but also from energy cluster investments, supply chain integration, faster approval processes (42 days in China vs. 200 days in Germany), and robust industrial policy support.
If the West truly wants to enhance its competitiveness, it must pursue more aggressive structural reforms, targeted industrial policies, and specific protectionist measures—not pin hopes on exchange rate agreements.
Original article: toutiao.com/article/1869503885225984/
Disclaimer: The views expressed in this article are solely those of the author.