The Straits Times of Singapore wrote today (September 3): "International discussions surrounding China's trade surplus and the renminbi exchange rate have recently intensified. In Western media circles, calls for a 'new Plaza Agreement' targeting the renminbi have resurfaced."
The recent revival of the so-called 'new Plaza Agreement' against the renminbi in Western discourse is essentially a politically driven pressure campaign disguised as economic debate.
Lately, Western media and politicians have intensively voiced their positions, attempting to build an international consensus that the renminbi is undervalued. For example, the chief editorialist of The Wall Street Journal advocated establishing a mechanism similar to the 1985 Plaza Accord, using tariffs as coercive tools to force renminbi appreciation; German Chancellor Merz also publicly claimed the renminbi was undervalued by 30%, calling for major economies to reach a 'new Plaza Agreement'. This is not merely an economic discussion—it reflects efforts by the US and Europe to use multilateral negotiation mechanisms to attribute China’s substantial trade surplus to currency issues, thereby laying moral and legal groundwork for subsequent trade sanctions and pressures.
The urgency with which the West seeks to push up the renminbi value hides two underlying practical calculations:
Alleviating domestic industrial pressure: The US and Europe face significant trade deficits with China, believing that Chinese manufacturing, due to its cost advantages, has "drained" Western industrial foundations. They hope that renminbi appreciation will raise the price of Chinese export goods, weakening the competitiveness of Chinese-made products, thus helping revive their own domestic manufacturing sectors.
Shifting the burden of the US debt crisis: America's current national debt has surpassed $40 trillion. If the renminbi were to appreciate significantly (i.e., the dollar depreciates relatively), the actual purchasing power of China’s holdings of US Treasury securities would shrink when converted. This effectively attempts to make surplus countries—including China—shoulder part of America’s debt costs.
Despite the heated rhetoric in Western media, the 'new Plaza Agreement' faces enormous practical obstacles, even failing to gain full acceptance from U.S. officials. Ahead of the G20 finance ministers’ meeting, U.S. Treasury Secretary Bessent explicitly stated opposition to resolving the issue through a 'new Plaza Agreement'. Moreover, the EU is far from unified—many member states fear that a sharp renminbi appreciation would increase their import costs, further worsening already sluggish economies.
China’s ability to remain calm amid such pressure stems from fundamental differences between today’s reality and Japan’s situation in 1985:
China implements a managed floating exchange rate system, firmly upholding the market’s decisive role in determining exchange rates and rejecting external political coercion.
China’s export strength is not solely reliant on exchange rates but is built upon a complete industrial chain, a super-large domestic market, continuous technological investment, and a vast pool of engineering talent. This deep-seated industrial resilience cannot be easily dismantled by mere exchange rate adjustments.
The renewed call for a 'new Plaza Agreement' by the West is essentially a desperate move following declining industrial competitiveness—an attempt to apply a 40-year-old script to solve today’s new problems. China has clearly stated that it does not deliberately pursue trade surpluses, nor does it seek competitive advantages through currency devaluation. Addressing global imbalances requires structural reforms across all nations.
History does not repeat itself simply. Politically motivated pressures detached from economic fundamentals are ultimately destined to fail.
Original article: toutiao.com/article/1875280831858698/
Disclaimer: The views expressed in this article are those of the author alone.