International Trade

Start Your Free Trial

Can China's economic policy be seen as neo-mercantilist?

Expert Answers info

rrteacher eNotes educator | Certified Educator

calendarEducator since 2011

write5,464 answers

starTop subjects are Literature, History, and Social Sciences

China's trade policy, and economic policy more broadly, not only could be but has in fact been characterized as neo-mercantilist. As one economic analyst puts it, the economic regime in China has all the hallmarks of a mercantilist system. Its centralized government "controls capital movements, discourages imports and encourages exports." Besides the structural differences between the Chinese government and, say, the United States, one reason the Chinese are able to pursue this policy is because they have a massive labor force that can produce goods more efficiently. Combined with economic policies, this means that Chinese-produced goods are cheap, and therefore flood global markets. In this sense, Chinese regulation of the economy very much leads to a neo-mercantilist system.

At the same time, unlike the European mercantilist systems of the early modern period, the Chinese economy has to import technology from other economies, including the United States. As the government invests more and more money in infrastructure, however, this distinction decreases in importance. Chinese policy is thus seen as neo-mercantilist by a number of analysts.

check Approved by eNotes Editorial
macain13 eNotes educator | Certified Educator

calendarEducator since 2019

write1,125 answers

starTop subjects are Literature, History, and Business

Yes, perhaps. China's economic policy is similar to mercantilism in that they attempt to have a strong supply of exports to fuel cash coming into the country. The country attempts to ensure strong economic profit, and mercantilism enforces the belief that liquid capital or cash is more powerful than raw goods and materials—so it is to a country's benefit to have more cash on hand by producing many exports.

It is not the same as traditional mercantilism, however, because the flow of trade is strictly regulated by the government, instead of being more of a free market prompting exports. Additionally, the government has appeared to take steps to weaken its own currency in order to facilitate exporting and trading and ensure a constant influx of capital from exporting transactions.

check Approved by eNotes Editorial
pohnpei397 eNotes educator | Certified Educator

calendarEducator since 2009

write35,413 answers

starTop subjects are History, Literature, and Social Sciences

It is certainly possible to see China’s economic policies as neo-mercantilist, though people in China might not agree.

Mercantilism was the economic doctrine that held that a country must export more than it imported in order to be economically strong.  Mercantilist countries tried to promote exports and reduce imports.  From the perspective of many Americans, China engages in such policies today.  Many Americans believe that China artificially weakens its currency so that it will be easier for Chinese firms to export.  China is also said to put informal barriers in the way of imports and to heavily subsidize exports.  All of these actions can be seen as neo-mercantilism.

check Approved by eNotes Editorial

Unlock This Answer Now