Chinese mercantalism

Extracted Attributes

• Goal

  To reduce a possible current account deficit or reach a current account surplus, and accumulate monetary reserves by a positive balance of trade.

• Definition

  An economic system and nationalist economic policy designed to maximize exports and minimize imports to bolster state power by accumulating resources and monetary reserves through a positive balance of trade, especially of finished goods.

• Modern Application

  Seen by some as a form of economic interventionism in industrializing countries.

• Key Policies/Tactics (Chinese Context)

  Forced localization measures (mandatory intellectual property or technology transfer, entrance into joint ventures, domestic production as a condition of market access), standards and currency manipulation, promulgation of domestic technology standards, onerous regulatory certification requirements, discriminatory government procurement activities, subsidies (loans, tax breaks, land grants) for state-owned enterprises, and direct discrimination against foreign firms.

• Historical Period (General Mercantilism)

  16th to 19th centuries in modernized parts of Europe and some areas in Africa.

Timeline

• Mercantilism was dominant in modernized parts of Europe and some areas in Africa. (Source: Wikipedia)

  16th to 19th centuries

• Deng Xiaoping's remarks during his inspection tour of southern China led to a significant influx of foreign capital into the country. (Source: sciencedirect.com)

  1992

• China formally joined the World Trade Organization (WTO), gradually reforming central and local regulations under market principles and global standards. (Source: sciencedirect.com)

  2001-12

• Chinese economic policy largely focused on actively encouraging foreign direct investment (FDI) in the country, positioning itself as a low-cost production platform. (Source: IndustryWeek)

  Mid-2000s

• China surpassed the U.S. to become the world's largest manufacturing producer. (Source: sciencedirect.com)

  2008

• China surpassed Germany to become the world's largest exporter of goods. (Source: sciencedirect.com)

  2009

• China surpassed Japan to become the world's second largest economy. (Source: sciencedirect.com)

  2010

• A U.S. tech group urged global action against Chinese 'mercantilism'. (Source: Reuters (via Wikipedia snippet))

  2017-03-16

• The President Trump administration mandated the MP Materials-DoD deal as a blueprint for industrial strategy to counter China's global dominance in critical materials. (Source: Related Documents)

  2017-2021

Mercantilism

Mercantilism is a form of economic system and nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. It seeks to maximize the accumulation of resources within the country and use those resources for one-sided trade. The concept aims to reduce a possible current account deficit or reach a current account surplus, and it includes measures aimed at accumulating monetary reserves by a positive balance of trade, especially of finished goods. Historically, such policies may have contributed to war and motivated colonial expansion. Mercantilist theory varies in sophistication from one writer to another and has evolved over time. Mercantilism promotes government regulation of a nation's economy for the purpose of augmenting and bolstering state power at the expense of rival national powers. High tariffs, especially on manufactured goods, were almost universally a feature of mercantilist policy. Before it fell into decline, mercantilism was dominant in modernized parts of Europe and some areas in Africa from the 16th to the 19th centuries, a period of proto-industrialization. Some commentators argue that it is still practised in the economies of industrializing countries in the form of economic interventionism. With the efforts of supranational organizations such as the World Trade Organization to reduce tariffs globally, non-tariff barriers to trade have assumed a greater importance in neomercantilism.

Web Search Results

• China's Economic Mercantilism | IndustryWeek

  To get there, China has embraced economic mercantilism on an unprecedented scale, using a wide array of policies to assist Chinese firms while discriminating against foreign establishments attempting to compete in China. These policies include a range of “forced localization” measures such as mandatory intellectual property (IP) or technology transfer, entrance into joint ventures, or domestic production as a condition of market access. [...] And that’s just the tip of the iceberg, other Chinese mercantilist policies include standards and currency manipulation; promulgation of domestic technology standards; onerous regulatory certification requirements; discriminatory government procurement activities; subsides (loans, tax breaks, land grants, etc.) for state-owned enterprises; and even direct discrimination against foreign firms. [...] IndustryWeek Chinas Economic Mercantilism # China's Economic Mercantilism As the Information Technology and Innovation Foundation (ITIF) writes in Enough is Enough: Confronting Chinese Economic Mercantilism, through the mid-2000s Chinese economic policy largely focused on actively encouraging foreign direct investment (FDI) in the country, promising to be a low-cost production platform for foreign multinational corporations (MNCs).

• Mercantilism - Wikipedia

  7. ^Martina, Michael (March 16, 2017). "U.S. tech group urges global action against Chinese "mercantilism"". Reuters. 8. ^Pham, Peter (March 20, 2018). "Why Do All Roads Lead To China?". _Forbes_. 9. ^Subramanian, Arvind (March 2, 2016). "Learning from Chinese Mercantilism". _PIIE_. 10. ^Friedrich List (1916). _The National System of Political Economy_. A.M. Kelley. p.265. 11. ^Now attributed to Sir Thomas Smith "Thomas Smith (diplomat)"); quoted in Braudel (1979), p. 204. [...] Some systems that copy several mercantilist policies, such as Japan's economic system, are sometimes called neo-mercantilist.( In an essay appearing in the May 14, 2007 issue of _Newsweek_, business "Business (disambiguation)") columnist Robert J. Samuelson wrote that China was pursuing an essentially neo-mercantilist trade-policy that threatened to undermine the post–World War II international economic structure.( #### Donald Trump Administration in the US [edit] [...] 3. ^LaHaye, Laura (2008). "Mercantilism". In Henderson, David R. (ed.). _The Concise Encyclopedia of Economics_. Carmel, Indiana: Liberty Fund Books. ISBN "ISBN (identifier)")9780865976665. 4. ^ _a__b_Samuelson 2007. 5. ^kanopiadmin (2017-02-15). "Mercantilism: A Lesson for Our Times? | Murray N. Rothbard". _Mises Institute_. Retrieved 2018-09-11. 6. ^"Macroeconomic effects of Chinese mercantilism". December 31, 2009.

• The return of protectionism: Prospects for Sino-US trade relations in ...

  access to overseas markets, and economic growth. China stands out among these economies, with a significant influx of foreign capital following Deng Xiaoping's famous remarks during his 1992 inspection tour of southern China.1By December 2001, when China formally joined the WTO, it had gradually reformed central and local regulations under the guidance of market principles and global standards, allowing China to ‘take part in international economic and technological cooperation and competition [...] and economic vitality. In 2008, China surpassed the US to become the world's largest manufacturing producer; in 2009, it surpassed Germany to become the world's largest exporter of goods; and in 2010, it surpassed Japan to become the world's second largest economy. In 2017, China became the largest source of imports for 67 economies and the largest export market for 36 economies.2 China's deep integration into the global production and trade system, with rapid growth in foreign trade, is [...] on a broader scale, in more spheres and on a higher level, and make the best use of both international and domestic markets’ (Jiang, 2002, Report to the Sixteenth National Congress of the Communist Party of China). Businessmen from Hong Kong and Taiwan, along with transnational capitals from Europe, the United States, Japan, South Korea, and other countries, converged with migrant workers from central and western China in coastal industrial development zones, generating tremendous productivity

• Protectionism in China: Forms, Purpose & Outlook - Intrepid Sourcing

  The most compelling reason for China protectionism is the infant industry argument. This argument suggests that new industries within a domestic market need help and support to allow them to grow; otherwise, mature foreign goods will saturate the domestic market before it even has a chance to develop. [...] However, the other side of the argument is that while China protectionism to protect the domestic market and their workforce, they actually have a negative welfare effect on exactly those aspects. The principle of comparative advantage suggests that the gains of free trade are higher than the losses, as countries will specialize in industries in which they have a comparative advantage. [...] Furthermore, non-tariff trade barriers – like quotas – are limits based on the volume for imports. Other similar methods include voluntary export restraints (which are similar to quotas but implemented after an agreement between the two countries) and administrative barriers such as regulations. Controlling import of foreign goods as China protectionismControlling import of foreign goods as China protectionism

• The Contentious U.S.-China Trade Relationship

  CFR Senior Fellow for Trade and International Political Economy Jennifer Hillman says Beijing has perfected the model of obtaining Western technology; it uses the technology to develop domestic companies into giants, and then unleashes them into the world market—at which point foreign companies can no longer compete. Hillman cites 5G networks as an example of an industry in which China dominates. “You start to see how big a problem it is to try to live in this world in which China owns more and [...] more markets and you can’t get in,” she says. The United States has been the most vocal critic of Chinese trade practices, but other countries including European Union (EU) members and Japan share these concerns. [...] At the time, U.S. President Bill Clinton and his advisors contended that bringing China into the global trading system would not only benefit the United States, but also foster economic and ultimately democratic reform in China. Still, the move was opposed by U.S. labor unions and many congressional Democrats, who argued [PDF] that China’s weak worker and environmental protections would incentivize similar practices elsewhere and bring about a “race to the bottom.” Although U.S. negotiators