Confronting Chinese Innovation Mercantilism

In the last decade, China accumulated $3.2 trillion worth of foreign exchange reserves and now enjoys the world’s largest current account balance. China’s economic strategy consists of two main objectives: 1) develop and support all industries that can expand exports, especially higher value-added ones, and reduce imports; 2) and do this in a way that ensures that Chinese-owned firms win. It is time for policymakers in the United States and other countries to begin responding to today’s reality for Chinese mercantilism represents a fundamental threat to not only the U.S. economy, but to the entire system of market and rules-based globalization.
http://www2.itif.org/2012-enough-enough-chinese-mercantilism.pdf