When Dokmertz mentioned the Plaza Accord, he responded, "China today is not the Japan it used to be."
(Beijing = Yonhap News) Correspondent Jeong Seong-jo = Chinese state media defined the demand for 'appreciation of the yuan' from some parts of the European Union (EU) as political oppression and argued that it cannot be accepted.
In a commentary on the 22nd, China's state-run English media outlet Global Times took issue with German Chancellor Friedrich Merz's statement in a speech he gave in Brussels, Belgium after the EU summit on the 19th (local time) that the Chinese yuan was undervalued by about 30%, which exceeded the 16% level estimated by the International Monetary Fund (IMF).
Prime Minister Merz said that China is pouring supplies into the market through large-scale subsidies, and cited the 1985 Plaza Agreement as an example of a way to solve this problem.
The Plaza Agreement refers to an agreement reached by the finance ministers of the five advanced countries (G5), including the United States, Japan, the United Kingdom, France, and West Germany, gathered at the Plaza Hotel in New York on September 22, 1985, under pressure from the United States, which was suffering from a "twin deficit" including a trade deficit and a fiscal deficit. This agreement resulted in an artificial appreciation of the Japanese yen and the West German mark, which had a large trade surplus with the United States.
The value of the yen, which was in the 240 yen per dollar range before the agreement, soared to the 120 yen range two years later, and as export companies cried out, the Japanese government relaxed excessive financial measures in response to the 'yen recession', resulting in an asset bubble. After the bubble burst in the early 1990s, the Japanese economy is said to have experienced a 'lost 30 years'.
Prime Minister Merz's comments are intended to reduce the intensity of China's exports to the European market by appreciating the value of the yuan, which China has kept artificially low, through measures such as the 'Plaza Agreement'.
China's Global Times argued that "the strengthening of Chinese companies' competitiveness is not due to the 'artificially manipulated' exchange rate, but comes from a comprehensive industrial system, continuous technological investment, a huge market, and active market competition," and added, "Targeting the yuan will not solve the challenges facing German manufacturing, nor will it eliminate the deficiencies in the European innovation chain."
The commentary emphasized, "The demand to renew the 'Plaza Agreement' is essentially a political pressure, not an economic solution," and added, "China will not tolerate exchange rates being used as an excuse for oppression, and it will not return to the old days when powerful countries controlled the fate of several countries. Today's China is not the Japan of the past."
The media added, "In the past, Europe was accustomed to taking technology, brands, and rules as a natural advantage as it occupied the top of the value chain, but now China is accelerating its catch-up and is partially leading in areas such as electric vehicles, batteries, machinery, and green products," adding, "Rather than asking China to slow down, it is better to accelerate reform on its own."
Earlier, in a speech on the 19th, Prime Minister Merz criticized the situation in which China is using massive subsidies to increase its market share, and said that 'subsidies for overproduction' and 'currency that cannot be freely exchanged' are unacceptable.
Hong Kong's South China Morning Post (SCMP) said, "Chancellor Merz's comments are among the strongest statements he has made toward China since taking office last year," and "suggested a significant shift in economic relations between Germany and China."
