"China-Style Plaza Accord" More Benefits than Drawbacks
The Storm Media Commentary, September 7, 2026
Recently, the idea of introducing a “Chinese version of the Plaza Accord” has garnered considerable attention, but it could potentially bring more benefits than drawbacks to China.
The main reason this issue has attracted attention is an article published by The Wall Street Journal ahead of the Group of 20 (G20) Finance Ministers’ Meeting, titled “Why the World Needs to Force China’s Yuan to Revalue.” The article called for the world to reach another “Plaza Accord,” but with the goal not of weakening an overvalued U.S. dollar, but of strengthening an undervalued renminbi. This was very much an article aimed at “testing the waters.” Although the issue was ultimately not discussed at the G20 Finance Ministers’ Meeting, Beijing’s response was firm and consistent with its longstanding position: it would not accept unreasonable pressure under the pretext of exchange rates. Chinese netizens, meanwhile, rose up to accuse the West of conspiring against China, insisting that China must not fall into the trap.
If a Chinese version of the Plaza Accord were to emerge and the renminbi were to appreciate substantially against the U.S. dollar, then the most immediate and obvious “benefit” would be a significant increase in the purchasing power of the renminbi. In addition to giving Chinese citizens greater purchasing power for overseas consumption, more importantly, Chinese companies and investors would have greater capacity to “compete abroad.” Of course, the first issue that would need to be resolved would be the various restrictions imposed by Europe and the United States on Chinese investment.
Another consequence would be that the scale of China’s economy would move closer to that of the United States. If we look at the ratio between the economic sizes of the two countries over the past 20 years, from 2006 to 2010 was a period of rapid catch-up. In 2006, China’s GDP was less than 20 percent of the size of the U.S. economy, but by 2010 it had risen to 40 percent. At the time, apart from the impact of the financial crisis on the United States, the main factor was China’s economic growth rate, which was far higher than that of the United States. From 2011 to 2021, the ratio rose from 40 percent to a peak of 75.2 percent in 2021. Although China’s growth rate gradually slowed during this period, the overall strengthening of the renminbi exchange rate continued to push this figure upward. Since then, it has fallen to 64 percent, with both slower economic growth and the depreciation of the renminbi contributing to the decline.
In the future, China’s economic growth rate will certainly find it difficult to return to the high growth rates of 8 to 10 percent seen in the past. Growth of around 5 percent, or even as low as 4 percent, will become the new normal. As a result, it will become increasingly difficult for the size of China’s economy to catch up with that of the United States. However, if the renminbi were to appreciate substantially, this gap would immediately narrow.
As for the main argument against renminbi appreciation—that it would undermine export competitiveness—the cases of Germany after the Plaza Accord, as well as Taiwan’s experience when it was forced to allow its exchange rate to appreciate from NT$40 per U.S. dollar to NT$26–27, suggest that this need not necessarily be the outcome. Moreover, judging from China’s trade performance after the trade war and tariff confrontation with the United States, the competitiveness of Chinese products and industries has not been built solely on low prices and an undervalued exchange rate. On this point, China could actually have a little more confidence.