Ten years ago, economists Gordon Hanson, David Autor and David Dorn identified what they called \u201cthe China shock.\u201d That referred to the supercharged economic growth in China triggered by its entry into the World Trade Organization in 2001 and the access to U.S. and European markets that followed. The ensuing flood of low-cost imports is reckoned to have cost 2.4 million U.S. jobs.<\/p>\n
Now, they warn of \u201cChina shock 2.0.\u201d In this case, China, building on that export base, expands its prowess to leading technologies. China shock 2.0 threatens to inflict similar damage on Europe and displace the U.S. as the world\u2019s leading technology power. Developed economies are waking up to the threat, but their reactions aren\u2019t just slow, they\u2019re inadequate.<\/p>\n
While consumers around the world benefited from lower-cost China-produced goods, the U.S. in particular paid a heavy price as its labor force was decimated. It is estimated that the shift of low-cost manufacturing from the U.S. to China cost about a quarter of all U.S. manufacturing jobs.<\/p>\n
That export onslaught has not let up. In a new paper for the Council for European Reform, economists Sander Tordoir and Brad Setser detail how, since the COVID-19 pandemic, China\u2019s export volumes have increased by more than 40% while imports have barely grown. Last year, China\u2019s overall export volumes grew at more than twice the pace of global trade. In the first quarter of 2026, its export growth hit 15%.<\/p>\n
The 2025 METI (Japan\u2019s trade ministry)\u00a0white paper on international trade agrees, noting that \u201cChina has expanded its diverse manufacturing capacity at an unprecedented speed and scale. Guangdong and Jiangsu provinces alone generate industrial value added comparable to that of Japan.\u201d Last year, China\u2019s trade surplus hit a historic $1.2 trillion.<\/p>\n
This steady growth occurred despite U.S. targeting of Chinese exports (like that of all its trading partners). There has been one important result of that campaign. As ace reporters of the Associated Press noted, \u201cthe world\u2019s second biggest economy is exporting more products than ever. It\u2019s just redirecting them away from the U.S. tariff wall and toward more open markets in Europe and elsewhere in Asia.\u201d<\/p>\n
Tordoir and Setser credit subsidies for much of China\u2019s success, pointing to International Monetary Fund estimates that put that support at $800 billion a year, or about 4.4% of gross domestic product. The Organization for Economic Cooperation and Development, the club of the 38 richest nations, estimates that Chinese manufacturers receive subsidies that are 3 to 9 times those available to businesses in advanced economies.<\/p>\n
Chinese experts disagree. In a paper that has received considerable attention precisely because it challenges the prevailing wisdom (and the OECD analysis in particular), economists Zhu He and…<\/p>\n","protected":false},"excerpt":{"rendered":"Ten years ago, economists Gordon Hanson, David Autor and David Dorn identified what they called \u201cthe China shock.\u201d…\n","protected":false},"author":2,"featured_media":45909,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[1695,12,14970,13,191,189,1707,1106,188,190,32123,260,84,2537],"class_list":["post-45908","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-ai","tag-china","tag-chinese-economy","tag-donald-trump","tag-economy","tag-economy-of-japan","tag-europe","tag-global-economy","tag-japans-economy","tag-japanese-economy","tag-joe-biden","tag-tech","tag-u-s","tag-xi-jinping"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/45908","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=45908"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/45908\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/45909"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=45908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=45908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=45908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}