Economic Context - The 1980s marked a critical turning point in the global economy, with the U.S. facing severe economic challenges such as rising fiscal deficits and trade imbalances, prompting the government to seek new economic strategies [4] - Japan, in contrast, experienced rapid economic growth, becoming the world's second-largest economy, leading to an overheated economy and a need for measures to control this growth [4][5] - The Plaza Accord of September 1985 was a significant moment, aiming to address global economic imbalances by promoting the depreciation of the dollar, particularly against the yen, which had implications for both U.S. and Japanese economic policies [5] Real Estate Boom - Following the Plaza Accord, the depreciation of the dollar and appreciation of the yen had positive short-term effects on both economies, with Japan's real estate market entering a phase of unprecedented prosperity [5][6] - Real estate became a high-return investment tool, with banks loosening lending policies and providing low-interest loans, leading to a surge in demand for real estate [6][7] - The real estate market in Japan saw extreme price increases, particularly in major cities like Tokyo, where property prices reached unprecedented levels [6] Bubble Burst - By 1992, the Japanese real estate market began to show signs of weakness, leading to a rapid decline in property prices as demand plummeted and unsold properties accumulated [8] - The bursting of the real estate bubble resulted in significant financial distress for many investors and homeowners, with many facing negative equity as property values fell below their mortgage amounts [9][11] - The economic impact was severe, with related industries such as construction, finance, and retail suffering greatly, leading to increased bankruptcies and rising unemployment [11][13] Societal Impact - The economic downturn led to widespread despair, with many families unable to cope with financial pressures, resulting in a tragic increase in suicide rates during this period [13][14] - The crisis prompted a societal reflection on economic practices and values, shifting perceptions of wealth and success, particularly regarding real estate as a symbol of status [16] - Interestingly, families that had previously been unable to afford housing found new opportunities as property prices fell, leading to a shift in the housing market dynamics [16]

Core Viewpoint - The article discusses the resurgence of the US dollar and its implications for the Chinese economy, drawing parallels with Japan's past experiences and emphasizing the need for a strategic response from China in the face of potential economic challenges posed by the dollar's strength [2][3][5][7]. Group 1: Dollar Dynamics - The US dollar serves as both a global trade settlement currency and a reserve asset for central banks, playing a crucial role in maintaining global economic stability while also acting as a financial weapon that can extract wealth from other nations [2]. - The "dollar smile curve" illustrates the dollar's dual nature, with its strength peaking during global financial panic and periods of robust US economic growth, while it weakens during economic downturns [2][3]. Group 2: Historical Context - The 1985 Plaza Accord exemplifies the US's strategy of manipulating the dollar to address its trade deficits, which ultimately led to significant economic consequences for Japan, including a massive asset bubble and subsequent economic stagnation [3][5]. - Japan's reliance on US monetary policy and its failure to address underlying economic issues contributed to its prolonged economic malaise, known as the "lost two decades" [5]. Group 3: China's Strategic Response - China is adopting a proactive approach to manage its currency, utilizing a "managed floating exchange rate system" to allow for market-driven fluctuations while maintaining control to stabilize expectations and prevent panic [7]. - The strength of China's industrial system, which encompasses all 41 industrial categories recognized by the UN, provides a solid foundation for economic resilience against external shocks [8]. - China's strategy to attract foreign capital involves opening its bond and stock markets, creating a more appealing investment environment rather than isolating itself from global capital flows [8]. Group 4: Comparative Analysis - The nature of US-China relations differs significantly from that of US-Japan relations, with China maintaining greater sovereignty and bargaining power, which influences its strategic decisions in the face of US dollar dominance [8]. - The article suggests that while history may not repeat itself, the dynamics of the current US-China competition are more complex, with China possessing a broader strategic depth and a more robust policy toolkit compared to Japan in the 1980s [8][10].

Core Viewpoint - The "Mar-a-Lago Agreement," proposed by the U.S. White House Council of Economic Advisers, aims to reshape global economic governance through high tariffs, dollar depreciation, debt restructuring, and multilateral currency negotiations, reminiscent of the 1985 Plaza Accord [1][2][4] Group 1: Historical Context and Comparisons - The original Plaza Accord aimed to address the overvaluation of the dollar and the growing U.S. trade deficit, resulting in significant dollar depreciation and the accumulation of asset bubbles in Japan [1] - The new "Mar-a-Lago Agreement" is seen as a "Plaza Accord 2.0," attempting to leverage financial measures alongside trade tools to balance U.S. trade relations with other countries [2][4] Group 2: Institutional Implications - The "Mar-a-Lago Agreement" is viewed as a new framework for a Bretton Woods 3.0 system, integrating finance, trade, and security, characterized by U.S. unilateralism and coercive arrangements [4][5] - The agreement may solidify U.S. institutional advantages, potentially leading to a precedent where the U.S. advances its interests under the guise of bilateral negotiations [5][7] Group 3: Dollar Hegemony and Financial Control - The agreement could create a new pathway for dollar hegemony, combining financial alliances, digital currencies, and asset anchoring systems to regain control over capital markets [8][10] - The U.S. is attempting to establish a dominant position in digital assets and rule-setting before the trend of de-dollarization takes hold [10][13] Group 4: Strategic Responses from China - China is urged to develop a systematic alternative to the current rules, particularly in green finance and digital assets, to enhance its credibility and position in the global financial order [15][18] - The need for China to actively participate in shaping global financial agendas and to build alliances with BRICS, RCEP members, and Belt and Road partners is emphasized [18]

Group 1 - Japan is unlikely to face pressure from the U.S. to intentionally strengthen the yen despite President Trump's criticism of Japan's trade surplus with the U.S. [2] - The U.S. dollar's status as a global reserve currency remains solid, but it has become more susceptible to selling pressure following Trump's announcement of comprehensive "reciprocal" tariffs [2][4] - The dollar index has experienced its worst first half since 1973, declining by approximately 11%, while the dollar-yen exchange rate has dropped by 7.5% this year [4] Group 2 - The concept of handling currency issues through finance leaders has become ingrained in the U.S. government since Prime Minister Abe successfully persuaded Trump to delegate these matters during his first term [3][4] - Japan has several strategies to leverage in trade negotiations with Washington, such as increasing investments in the U.S. and contributing to Alaska's LNG projects [4]

Core Viewpoint - The former president of the Asian Development Bank, Masatsugu Asakawa, stated that a coordinated devaluation of the US dollar led by the United States, similar to the Plaza Accord, is unlikely to occur in the near future [1] Group 1 - The statement reflects a significant perspective on the current global economic landscape and the role of the US dollar [1] - The mention of the Plaza Accord highlights historical precedents in currency valuation and international economic cooperation [1] - Asakawa's insights suggest a cautious outlook on potential future currency interventions by the US [1]

Group 1 - The U.S. has taken a harsh stance against Japan, despite Japan's past support during the Gulf War and alignment with U.S. strategies in the Indo-Pacific region [1][3] - Japan's purchase of F-35 fighter jets is seen as both a payment for U.S. protection and a show of support for U.S. strategies [1] - The U.S. has previously exploited Japan's economy through the Plaza Accord, which forced the appreciation of the yen and weakened Japan's economic growth [3] Group 2 - Japan has overestimated its influence and the strength of its alliance with the U.S., leading to a lack of compromise in negotiations [5] - The U.S. has imposed a 25% tariff on Japan, contrasting with its more lenient approach towards the UK, indicating a targeted strategy against Japan [7] - Japan's economic development has relied on U.S. industrial transfers, and the current U.S. policies are seen as a means to extract further economic benefits from Japan [9]

Group 1 - Japan is currently taking a strong stance against the U.S. regarding tariffs, refusing to easily accept a proposed 25% tariff and responding with strong condemnation to U.S. threats of retaliation [1] - Historical context shows that Japan's previous compliance with U.S. demands, such as the Plaza Accord in 1985, led to significant economic downturns, including a prolonged period of stagnation known as the "Lost Decade" [3][6] - Japan's economy experienced a significant bubble in the 1980s, with real estate prices in Tokyo reaching over 200 million RMB per square meter and the Nikkei index peaking above 37,000 points, which was only recently surpassed [4][6] Group 2 - The current economic situation for Japan is precarious, as it has lost access to Russian oil and gas, making it increasingly reliant on the U.S. for energy resources [7] - Japanese manufacturers are considering relocating factories to the U.S. to reduce costs, which poses a risk to Japan's domestic manufacturing base and economic stability [7] - Japan holds over $1 trillion in U.S. Treasury bonds, which serves as a potential leverage point in negotiations, although Japan's diplomatic relations with other countries have weakened, limiting its options [8]

Key Insights - The report highlights the ongoing "stagflation" risk in the US economy, with the first quarter of 2025 showing a contraction in GDP of -0.5%, indicating a technical recession, while core PCE inflation remains sticky at 3.5% [9] - The approval of the first stablecoin license for a Chinese brokerage firm signals a shift in regulatory stance towards stablecoins, emphasizing their strategic value for cross-border payments [9][8] - Xiaomi's YU7 model has seen overwhelming demand, with over 289,000 orders within an hour of launch, raising concerns about production capacity and potential legal risks in secondary markets [9][8] Industry Analysis Fluorochemicals - The quota system driven by policy has led to a rigid freeze on the production capacity of third-generation refrigerants, accelerating the exit of smaller players and allowing leading companies to gain pricing power, pushing refrigerant prices upward [17] - The supply of fluorite resources is constrained due to low extraction ratios and stricter environmental policies, further solidifying cost support [17] Innovative Pharmaceuticals - The innovative pharmaceutical sector is experiencing a phase of adjustment, primarily influenced by emotional factors and trading dynamics, with valuations returning to near five-year lows, presenting an entry opportunity for investors [18] - The export transaction volume of domestic innovative drugs reached $45.5 billion from January to May 2025, contributing positively to profits [18] Semiconductors - The semiconductor market is witnessing a recovery in risk appetite, with the AI industry chain potentially becoming a focal point again [18] - External technological restrictions and geopolitical risks are driving the localization of supply chains, with increasing domestic production rates for semiconductor equipment and materials [18]

Group 1 - The core viewpoint is that the US dollar may further depreciate following the G7 meeting, as global leaders discuss exchange rate policies as part of trade negotiations with the US [1][3] - Citigroup analysts suggest that while Washington is unlikely to actively pursue a weaker dollar, the currency will eventually depreciate as the US reaches agreements to lower tariffs with its trade partners [1] - The focus on exchange rate policy has intensified ahead of the G7 meeting, with officials from South Korea and Taiwan indicating discussions with the US on this topic [1] Group 2 - Citigroup expects that Treasury Secretary Yellen will not seek a comprehensive agreement to suppress the dollar like the 1985 Plaza Accord, but will emphasize the role of central banks in exchange rate issues [3] - Analysts believe the risk of dollar depreciation is increasing, as the motivation for maintaining a strong dollar policy will diminish with the removal of high tariffs [3] - Since the announcement of high tariffs in early April, the Bloomberg Dollar Spot Index has declined by 4%, leading to uncertainty about US policy and damaging confidence in the dollar and other US assets [3]

Group 1 - The recent surge in the New Taiwan Dollar (NTD) is perceived to be linked to US-Taiwan tariff negotiations, with speculation that the US is pressuring Taiwan to appreciate its currency to reduce trade deficits [1] - The increase in tariffs imposed by the US on Taiwan has severely impacted local industries, particularly those reliant on exports such as machinery, chemicals, and textiles, exacerbating their operational challenges [1] - The spokesperson from the Taiwan Affairs Office criticized the Taiwanese government's response to US tariff pressures, suggesting that their negotiations are merely performative and that the government is capitulating to US demands [1] Group 2 - The Taiwanese government’s proposed strategies to cope with the economic challenges are viewed as attempts to appease the US through large-scale procurement and investment, which is characterized as a form of submission [1] - There is a call for cross-strait cooperation among Chinese people to safeguard development rights and national dignity in the face of shared risks and challenges [1] - The Taiwan Affairs Office expressed concern for the difficulties faced by local industries and encouraged relevant sectors to invest and develop in mainland China [1]