US cannot impose another 'Plaza Accord' on China, says Chinese ambassador

The United States must abandon the illusion that it could impose another "Plaza Accord" on China and stop dreaming of making itself great by making enemies, according to a top Chinese envoy.

Cui Tiankai, Chinese ambassador to the United States, made the remarks at a recent roundtable discussion organized by the Center for Strategic and International Studies and the Renmin University of China in Washington DC.

"On what to do next, for China it is very clear. I wish to advise people to give up the illusion that another 'Plaza Accord' could be imposed on China. They should give up the illusion that China would ever give in to intimidation, coercion or groundless accusation," said Cui.

The Plaza Accord is a 1985 agreement signed by France, Germany, the United States, the United Kingdom and Japan to manipulate exchange rates by depreciating the US dollar against the Japanese yen and the German Deutsche mark, with an intention to correct trade imbalances between the United States and Germany and the United States and Japan. The devaluation of the US dollar allowed America's trading partners to purchase US exports for cheaper prices. The signing of the agreement resulted in a Japanese asset price bubble, which degenerated into a protracted period of deflation and sluggish economic growth in Japan known as the Lost Decade.

Cui criticized some people in high places or serving as economic and strategic advisers to the US government and leaders for having a mindset that leads to an increase in tensions between China and the United States.

"For instance, they believe that they could disrupt the global supply chain in defiance of all the economic imperatives without any damage to their own country. They believe that they might keep monopoly over innovation forever and prevent others from making innovation and benefiting from technological progress. They believe that they could point fingers at others and escape the heavy responsibility of addressing the increasing economic and social divide at home. They believe that they could make themselves great by making everyone else their enemies," said Cui.

"I think it is such a mindset that could go a long way to account for the current uncertainties in international relations and difficulties in our bilateral relations, especially on trade and economic issues," noted Cui.

The Chinese ambassador's remarks came as China and the United States, the world's two largest economies, have been mired in a tit-for-tat tariff war, which economists say could have an impact on the global economy.

In August, Chinese and American officials resumed their trade talks, which ended with no substantive progress. Sources familiar with the trade negotiations revealed to the Financial Times that Chinese officials agreed to offer some market-opening measures, increase purchases of US energy and agricultural products and keep the yuan's exchange rate stable, but the offer was rejected by the United States, which had presented a long list of concessions, which are considered unrealistic.

At the roundtable discussion, Cui reaffirmed that his country is still willing to engage in serious, substantive and pragmatic negotiations and consultations to address the economic and trade problems on the basis of mutual respect.

"This has to be a process of goodwill for goodwill and good faith for good faith. If we can reach an agreement through this approach, I do not think the current economic and trade issues would be that difficult," said Cui.

Cui also dismissed the notion that China and the United States would fall in the so-called Thucydides Trap, which says that a rising power and an established power will go to war as they cannot coexist.

"We do have a good alternative. The Chinese civilization and culture has all along stressed the values of harmony, cohesion, flexibility, openness and tolerance. If we give full play to all these values, I am sure our two countries can find a new path and build a new type of relationship between major countries. And indeed, the best way of avoiding a trap is to open a new path," said Cui.

However, on Tuesday, CNN reported that the Donald Trump administration could impose tariffs on roughly half of all Chinese goods exported to the United States by the end of this week. It is unclear whether the new tariffs, which could be the most serious round of tariffs the United States has slapped on Chinese goods this year, will be set at 10 percent or 25 percent.

So far, Beijing has not softened its stance in the face of the US tariff war and reacted with tariff retaliations.
 


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