The China Shock in the AI Era

Recent polls reveal growing public unease about artificial intelligence (AI) in the United States. In the wake of a series of local ballot measures limiting data-center construction, nearly 70% of voters backed restrictions across 10 states. A 2026 Pew Research Center survey shows that 52% of Americans feel more concerned than excited about AI's increasing presence in daily life, up from 37% in 2021.

Only 9% felt more excited than concerned, while 60% expressed a desire for greater control over AI usage. These anxieties stem from safety concerns, job displacement fears, surveillance risks, misinformation spread by AI, and the immense energy demands of data centers. Geopolitical tensions between the United States and China have further amplified the public's concern, especially following allegations that Nvidia CEO Jensen Huang may have been involved in an espionage scandal.

China's dominance in global trade and AI development has led to the term "China Shock" to describe the economic impact of its massive export surge in the early 2000s, which contributed to job losses and manufacturing declines in the United States. This phenomenon has since become a global phenomenon, as Chinese exports have surged worldwide without a corresponding rise in imports.

Now, the convergence of the China Shock and an alleged "AI Productivity Shock" could exacerbate economic imbalances, as China's advanced manufacturing and AI capabilities may generate output without creating corresponding demand. The potential for a glut of goods without a matching increase in consumer purchasing power raises concerns about the distribution of economic gains.

While some experts argue that past automation waves created new jobs and income, the unique nature of AI remains uncertain. China's rapid technological advancements have resulted in industries producing more than global demands, yet domestic consumption has stagnated and youth unemployment has risen. The question remains whether AI, like previous technologies, will yield the promised employment and income benefits for workers and households in China.