Dani Rodrik: Is China really a mercantilist economic power? Let’s not jump to conclusions
What, then, would make China’s surpluses a problem? First, macroeconomic imbalances can create financial instability and increase the risk of a crisis. Second, insofar as they produce ‘excess capacity’ and ‘over-production’ in manufactured sectors, China’s surpluses may promote industrial decline in deficit countries. And third, they can aggravate distributional and social problems in deficit countries.
