Why China and the World Needs a New Plaza Accord

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The model is what transpired 30 years ago in the New York hotel owned by U.S. presidential wannabe Trump. On Sept. 22, 1985, the then G-5 nations - France, Germany, Japan, the U.K. and the U.S. - plotted an unprecedented intervention in currency markets. One can argue Japan came out on the losing end of a deal to boost the yen, but traders marveled at the show the unity and relative competence of the moment...

too many G-20 members fear retribution and won't speak truth to Chinese power. That's why the G-7 should quietly hatch a devaluation plan with Beijing.

If this sounds like a non-starter, consider the alternative: on an unsuspecting evening in the not-so-distant future, Beijing announces a 10% downshift, knocking the Dax, Dow Jones, FTSE, Nikkei and Shanghai Composite indexes several hundred points lower each. The yen surges, putting the final nail in the Abenomics coffin. Deutsche Bank executives call TV stations to insist, anew, their balance sheet is sound. Rumors of hedge-fund blowups ricochet around global markets. Politicians in London, Tokyo and Washington wonder how, of how, did this happen?

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The G-7 would become hugely relevant again and stabilize shaky markets. China, meanwhile, would score geopolitical points for playing a stakeholder role in the global system, not just a shareholder one. Xi could win plaudits at home by telling his 1.4 billion that, no, the West doesn't want China to fail. He can even take credit for suggesting the meeting happen not in Trump's Plaza, but the Chinese-owned Waldorf Astoria Hotel. Talk about a psychological a win-win for a colossally disoriented world.