China’s currency stance could cost it lost decades

Support us Is China's exchange rate artificially manipulated? Image: YouTube Screengrab China may be facing a confusing short circuit in its economic and political calculations that could seriously harm the nation over the next few years. A huge and growing trade surplus seems to be the main obstacle driving China toward friction and conflict with much of the world. It is thus crucial for China to oppose the main narrative, as the official Global Times recently wrote: “The enhanced competitiveness of Chinese enterprises arises from a comprehensive industrial system, sustained investment in technology, a massive market, and robust market competition – not from the so-called ‘artificially manipulated’ exchange rates. Targeting the RMB will not solve the challenges facing Germany’s manufacturing sector, nor will it address the shortcomings in Europe’s innovation chain.” It added: “German Chancellor Friedrich Merz stirred controversy over the RMB exchange rate, claiming that the currency was undervalued by as much as 30% and citing the 1985 “Plaza Accord” – which plunged Japan into its “lost decades” – as a solution.

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