Question

why china's economic policies are seen as neo-mechantilist?

why china's economic policies are seen as neo-mechantilist?

Homework Answers

Answer #1
  • Merchantilist believes that a country must increase its export and reduce import so that trade balance remains positive.
  • Recently, it has been observed that china is also following same policy by increasing its export and reducing imports.
  • China is artificially keeping value of its currency low thereby its export is becoming competitive and low value of its currency is discouraging imports.
  • China has mammoth foreign exchange reserve.
  • Hence, china is called neo-Merchantilist.
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