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Trying To Avoid Their Own 'Plaza Accord' Lost Decades, The Chinese Consult With Japan

By OccasionalCortex following x   2019 Mar 20, 5:46pm 253 views   0 comments   watch   nsfw   quote     share    

US demands that China limit the yuan’s depreciation have been compared with the Plaza Accord, under which Japan, France, Germany, the United Kingdom and the US agreed to push the value of the US dollar down against the Japanese yen and German Deutsche mark.

Through the Plaza Accord, the five countries began selling large amounts of US dollars, leading to a significant loss in dollar value. The intervention resulted in the Japanese yen doubling in value against the US dollar in under two and a half years. Japan’s exports became more expensive and less competitive as a result, arguably defanging the engine of its 1980s economy.

As China and the US reach enter the final stages of negotiations over a deal that could end the trade war, the parallels are clear for many in China.
A widely-held perception among Chinese scholars is that the Plaza Accord helped to fuel Japan’s asset bubbles in the following years, which led to decades of economic stagnation and wrecked Japan’s chances of catching up with the US economy. Indeed, former Japanese deputy vice-minister for finance, Masahiro Kawai, said last month that he is in regular touch with Chinese officials and economists on this topic.


"Japan's stagnation is China's best case outcome, and what the Americans are pushing for is much more restrictive than the Plaza Accords." -- Peter Zeihan, March 20 2019

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