Question

My Global Business professor had us read a long reading about China and its changing economy. One of the questions shes asks us is, "Is China pursuing a neo-mercantilist economic policy? Explain your position." I am having a hard time, considering this reading is 25 pages long. I say yes, that China is pursuing, but I'd like to hear your thoughts!

Answer 1

Neo mercantilism suggests that trade would not be a mutually beneficial to all partner countries. Trade is a zero sum game where one party can get benefits at the cost of other. Thus member country seeks to keep the trade balance surplus.

China is pursuing similar policies to keep its trade balance positive. China is keeping it's currency artificially low and that has increased the trade surplus for country. US has trade deficit worth over $420 billion. It has been caused by the manipulated policies of china.

It proves that china indeed is pursuing the mercantilistic policies.