China Shock 2.0 reshuffles winners and losers
China 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.
China is attempting to export its way out of a domestic economic downturn, setting off what Western governments label as a second "China shock." This strategy is generating both new domestic challenges and potential beneficiaries. In July, China saw a 24% year-on-year increase in exports and a $113 billion trade surplus, indicating a potential trillion-dollar-plus surplus in 2026.
However, the country also reported a 4.3% growth in GDP in the second quarter, alongside declining retail sales growth of -0.6% in May and -1.3% in June.
This divide reflects China's policy decisions. For the past decade, the world's largest exporter aimed to dominate advanced manufacturing, securing significant market shares in electric vehicles, solar cells, and batteries. Western policymakers have termed this China Shock 2.0, referencing the early 2000s when China's manufacturing exports disrupted industries in Europe and the United States.
Today, governments argue that subsidized Chinese electric vehicles and green-tech exports are undermining domestic producers and jeopardizing jobs, particularly in Europe.
Despite these tensions, Beijing has only made limited efforts to boost domestic consumption. The government has implemented some measures to curb the intense price wars draining profitability in sectors like food delivery, EVs, and solar components, but the so-called "anti-involution" campaign has seen minimal success.
Written by urgent.news from The Jakarta Post Academia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
