Writing at the East Asia Forum, Ulrich Volz argues that instead of pressuring China to allow the yuan to appreciate, we should be encouraging a regional approach to East Asian currency exchange rates. The problem with leaning on any one currency with regard to the dollar, but in isolation to the others, is that it threatens the exchange-rate stability upon which the increasingly specialized intra-regional chain of production depends. A coordinated regional approach, by contrast, would stabilize intra-regional networks independently of the dollar, thereby allowing for greater flexibility of the whole vis à vis external markets. In other words, the first step toward the new Plaza Accord that Thomas P.M. Barnett referred to last week in his WPR column would be what Volz calls a Beijing Accord.
Volz actually frames this as what China should propose, rather than what we should push for. I'd add that he's probably right about the former, which is why we're unlikely to see the latter. For all its rhetorical emphasis on positive-sum thinking and multilateralism, the Obama administration's approach to many of these global issues is guided by a vision of the "greater good" that bears an uncanny resemblance to U.S. national interests.
For now, the Obama team has gotten a pass from China's brittle diplomacy, whose myopic fixation on "returning serve" at all costs seems to reflect the national obsession with ping pong. By contrast, Chinese leadership would entail pushing for the kind of regional approach Volz discusses, not only to currency issues, but also to the maritime territorial disputes that have recently been making headlines. That, much more than the possibility of naval or military rivalry, would put U.S. strategists in a cold sweat, especially if China managed to place those efforts in the framework of a regional forum that excluded the U.S. That kind of forum looked like a possibility a year or two ago, but I'd be very surprised if Beijing could generate much enthusiasm for such a venue now.