Germany aligns with EU's tough China line, calls for 'Plaza Accord' talks on the yuan

German Finance Minister Lars Klingbeil told a Berlin press conference that, in response to China's widening trade surplus and the pressure it places on global real exchange rates, a multilateral currency-coordination framework modelled on the 1985 Plaza Accord should be established. The Plaza Accord brought together the US, Japan, Germany, France and the UK to gradually weaken the dollar.

Klingbeil said the proposal had been coordinated with the European Commission and the European Central Bank. Germany's move marks an alignment with Brussels' hardening line on China's structural surplus, despite the country's standing as the EU's closest trade partner with Beijing. France's Finance Ministry and Italy's Treasury have backed the proposal.

The People's Bank of China and the Finance Ministry said in a Friday-evening statement they were 'constructively and conditionally open' to the talks. Beijing's condition is that Washington ease semiconductor export controls. The offshore yuan (CNH) appreciated 0.7% against the dollar; EUR/USD rose to 1.18 after the announcement.