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China is accused of indulging in beggar-thy-neighbor policy. Explain the term and examine its consequences on rest of world?

Topic : India and its neighborhood- relations. Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests. Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

3. China is accused of indulging in beggar-thy-neighbor policy. Explain the term and examine its consequences on rest of world? (250 words)

Reference: investopedia.com

Why the question:

The question is premised on the beggar-thy-neighbor policy.

Key Demand of the question:

Discuss in detail the concept of beggar-thy-neighbor policy, its use by China and examine its consequences on the rest of the world.

Directive:

Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction:

Beggar thy neighbor policy refers to a policy that aims at addressing one’s own domestic problems at the expense of others — trading partners in particular. It utilizes currency devaluations and protective barriers to alleviate a nation’s economic difficulties at the expense of other countries.

Body:

Conventionally, countries often impose tariff barriers and restrict imports to protect their domestic industries. However, with globalization, such practices are not possible, beyond a level, Central banks devalue or encourage the depreciation of their own currencies compared to its trading partners by intervening in the local currency markets to retain their respective competitive edge and price advantage in exports.

Explain the moves made by China in this direction.

Conclusion:

Conclude that the current non system is pushing the world toward competitive monetary easing, to no one’s ultimate benefit. Developing a consensus for free trade and responsible global citizenship and

thus resisting parochial pressures would set the stage for the sustainable growth the world desperately needs.