Neo-Mercantilism Analysis

In determining if China is pursuing a Neo-mercantilist approach to world trade, it is first important to determine what Neo-mercantilist trade means. According to Hill (2014: 162), “The main tenet of mercantilism was that it was in a country’s best interest to maintain a trade surplus, to export more than it imported. By doing so, a country would accumulate gold and silver and, consequently, increase its national wealth, prestige and power.” The mercantilist approach encouraged government involvement in order to attain an excess in the balance of trade. In order to maximise exports, governments would typically subsidise those exports. Consequently, the opposite was true for imports. In order to minimise imports, governments would limit imports by means of tariffs and quotas. Neo-mercantilism takes this one step further by associating political power with the economic power gained by utilising the mercantilist trading approach.

Thus far only one half of the question was answered. After determining what neo-mercantilism means, it is now necessary to find clues and
Most steel producing countries have two or three significant steel producing companies. China has twenty-six of the world’s fifty largest steel producing companies. Six of the top ten steel producing companies are Chinese and all of these companies are State Owned Enterprises (SOEs) for which the normal rules of the market don’t apply. Some of them have accrued huge debts and are loss making, but they still carry on producing steel. In building up its huge productive capacity, China now need to consolidate on a scale that has never before been attempted anywhere. China has indicated that it would only start consolidating its steel industry by 2025. It is expected that the Chinese industry will have to reduce its capacity by 100 to 150 million tons of steel in