Martin Wolf The dangerous triumph of neo-mercantilism
In the first 11 months of 2025, China ran a customs trade surplus of over $1tn.
Why is China running such huge trade surpluses and why is the US abandoning the relatively liberal trade policies of the past eight decades?
Mercantilism dominated European thinking on international economic policy in the 17th and 18th centuries. Mercantilists’ underlying belief was that international economic policy is primarily a tool of state power.
Since power, unlike prosperity, is relative, mercantilists think of international economic engagement as “zero sum”: you win, I lose.
Mercantilists also treasure domestic production and love trade surpluses and protection against imports. Adam Smith wrote The Wealth of Nations in the 18th century as an argument in favour of free trade, against just such mercantilism.
My colleague, Robin Harding, has raised even more disturbing worries about China: the Chinese, he suggests, do not want to import anything manufactured elsewhere.
Their aim, he argues, is domination of global manufacturing.
Martin Wolf Financial Times 19 January 2026
https://www.ft.com/content/cd68b35f-f00d-4a7d-a9be-56c639dd6b91
Jean-Baptiste Colbert, who ran Louis XIV’s treasury in the 17th century and whose name is now synonymous with the doctrine of mercantilism — a philosophy of economic nationalism, with intervention by the state if necessary to advance their interests at the expense of others.
The idea that governments can exert such influence over the private sector, as well as international trade, has been absent from the west (if not from China) for more than a century.
Now, the notion has taken hold that the free market system really did fail in the Global Financial Crisis, and efforts to mend it from within haven’t worked.
John Authers Bloomberg 22 november 2024
John Authers is a senior editor for markets and Bloomberg Opinion columnist, former chief markets commentator at the Financial Times
https://englundmacro.blogspot.com/2024/11/when-global-financial-system-suddenly.html
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