Theories Of Mercantilism In China

PBA4802 – ASSIGNMENT 02
Introduction
The trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports is called mercantilism (Wild and Wild, 2012, p. 140). The economic doctrine known as mercantilism appeared between the Middle Ages and the period of the triumph of the laissez-faire dating from 1500 to 1776. The major tenets of the mercantilist school were as follows: gold and silver as the most desirable form of wealth; nationalism; duty-free importation of raw materials that could be produced domestically; export restriction on raw materials; colonisation and monopolisation of colonial trade; opposition to internal tolls, taxes, and other restrictions on the movement…show more content…
However, China’s higher economic power over other nations lifted hundreds of millions of people from deep poverty and has helped improve health, education, and other social standards. According to the 2013 World Bank’s world developing indicators, China is listed among the Upper-Middle Income Countries (UMC) (Todaro and Smith, 2015, p. 43). Unlike China, the traditional mercantilists held almost all their nationals in abject poverty with an exception of the royalty, merchant capitalists, landlords and senior government officials (Brue and Grant, 2013, p. 18). The Heckscher-Ohlin factor proportions theory states that countries produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply (Wild and Wild, 2012, p. 140). China is labour abundant, influencing the cost of labour thereby attracting investment and economic…show more content…
4). According to the classical economist David Ricardo’s law of comparative advantage, even if one nation is less efficient than the other nation in the production of both commodities, there is still a basis for beneficial trade (Salvatore, 2014, p. 34). Unlike mercantilists that denounced imports, China is the largest exporter and second largest importer in the world, after USA.

Bibliography

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