The Analysis On The Background, Content And Implementation Of "Plaza Accord"

In 1980's, a serious imbalance appeared in the world economy .On one hand, the U.S. government faced twin deficits-both budget deficit and current-account deficit; On the other hand, in the early 1980's, as the expanding of the Japanese economy and trade surplus, Japan became the world's largest trade surplus country ,while the United States became the largest deficit country. Japan-U.S. bilateral trade conflicts happened increasingly as well. After years of rapid growth, the economic growth rate of U.S. speeded-down in 1985. External imbalance in the U.S. economy had been worsening continuelly. And the trade protectionism of U.S was increasing as the current-account expending. The U.S. Congress strongly urges the government to intervene in the foreign exchange market, in order to save the recession of manufacturing .So in September 1985, Japan, Germany, Britain, France's finance ministers and central bank governors was invited by the government of the United States to hold a conference in New York Plaza Hotel, in the name of "achieving a balanced non-inflationary growth and helping developing countries to solve their economic difficulties". At the conference, they reached a package of agreement, which included the repression of inflation, expansion of domestic demand, reduction of trade intervention and the joint intervention in the foreign exchange market, in order to accelerate the exchange rate of U.S. Dollar depreciate. It is known as the "Plaza Accord". In today's world economy, a serious imbalance appears in the external economy again. On one hand, after " subprime crisis", the U.S. economy faces recession and the huge twin deficits are more and more difficult to maintain. On the other hand, after 30 years of reform and opening up, China's economic grows far ahead in the world. China has become the engine of the world economic growth, which makes China fall in the main target of U.S. in its list to governance the trade deficit, and China seems to take the seat of Japan 24 years ago. The "Plaza Accord II" for China seems apparent, so exploring the background, content, effect of "Plaza Accord" means great significance to China.Firstly, this paper analyzes the background of "Plaza Accord" background?the phenomenon of the world economy imbalance and the reasons for it. Then, it points out that the essence of "Plaza Accord" is to adjust the imbalance of the world economy. And then, it explores the effects of "Plaza Accord" , particularly the effect in the adjustment of the imbalance between the United States and Japan .Finally, by comparing the background of "Plaza Accord II" to that of "Plaza Accord" , it trys to help China find a positive way to avoid repeating Japan's mistakes.