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View all search resultsChina Shock 2.0 reshuffles winners and losers
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An employee works on a solar panel production line on May 16, 2024, at a GCL System Integration Technology factory in Hefei, Anhui province, China. (Reuters/China Daily)
C
hina is trying to export its way out of a domestic slump, unleashing what many Western governments call a second "China shock." While this strategy is triggering trade fights abroad, it's also producing a new set of potential beneficiaries at home.
The dichotomy between China’s robust external sector and flagging domestic economy has been on full display in recent months.
China posted 24 percent year-on-year export growth in July and a US$113 billion trade surplus, following similar numbers in June, putting it on track for another trillion-dollar-plus surplus in 2026. Meanwhile, it recorded disappointing 4.3 percent gross domestic product growth in the second quarter, and subdued retail sales growth of minus 0.6 percent in May and 1.3 percent in June.
This split directly reflects Beijing’s policy choices.
Over the past decade, the world’s largest exporter has sought to gain dominance in advanced manufacturing, amassing enormous market share in products such as electric vehicles, solar cells and batteries.
Western policymakers have dubbed this "China Shock 2.0," echoing the period in the early 2000s, when China's rise as a manufacturing exporter disrupted industries across Europe and the United States. Governments today argue that a new wave of subsidized Chinese EVs and green-tech exports is undercutting producers and threatening industrial jobs, particularly in Europe.
While these tensions have been building abroad, Beijing has only taken modest steps to increase consumption at home. The Chinese government has implemented some measures to limit the cutthroat price wars crushing domestic profitability in industries such as food delivery, EVs and solar components, but this so-called “anti-involution” campaign has had limited success.
