China today is not Japan of 1985 accord

Source:Global Times Published: 2016-2-27 0:23:01

As financial ministers and central bankers from the Group of 20 convened in Shanghai on Friday, talk of reenacting a "Plaza Accord"-style currency interference has been drawing attention.

In 1985, the US, Germany, France, Britain and Japan signed an agreement to artificially lower the value of the US dollar against Japanese yen in order to stall the rising dollar and the growing trade deficit in the US.

The Chinese people are anxious about such proposals of a new "Plaza Accord," as they fear Japan's tragedy may happen again in China.

Following the signing of the 1985 accord, Japanese yuan drastically appreciated, but the country's economy slipped down into the "Lost Decade," and has still not recovered.

When signing the Plaza Accord, Japan was economically dependent on the US. The exchange rates were also under US control.

However, today's Chinese economy is bigger and China makes its own decisions in economic policies.

The sluggish world economy will not be stimulated simply by a new "Plaza Accord." It takes a series of measures in currency, financing and industrial policies. It also needs further coordination between developed and emerging economies.

Western economists have recently been showing increasing interest in administering remedies in relation to China. It shows the growing weight of the Chinese economy. On the other hand, it indicates their lack of confidence in China's economic outlook.

It is mistrust of China's economic development model, with hidden suspicion of China's political system.

US scholar Francis Fukuyama once said, "The big question for the future of global politics is straightforward: Whose model will prevail?"

Apparently China has come to a point where it has to show the world the sustainability of its development model. We should look back at the world economic situation when the Western powers signed the 1985 Plaza Accord, and evaluate the Chinese economy of today.

After more than three decades of reform and opening-up, a whole set of development model and management system with its own characteristic have been formed in China. Overcoming storms and waves, the Chinese economy will not tumble down due to current difficulties.

If the West sees this as a contest of Chinese and Western development models, so be it. We can have a fair competition. But they should not try to hype up China's problems to cover their own feeling at a loss. If all countries strive forward, the world economy will see a strong, balanced, and sustainable growth. This is the priority for the G20 members now.



Posted in: Editorial

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