Unlike the US, China is not trying to shut out the future
Yet the term 'China Shock 2.0' practically begs misinterpretation. Both authors clearly understand this: they speak against the reflexive protectionism that such a framing inspires and posit instead a forward-facing ideal of careful investment and subsidy.
It must be stressed that today's changes are not a repeat of past disruptions. They are not about factory closures or lost jobs; they are about the construction of entirely new systems and industries. China is not here as a destabiliser, but as a builder.
Today's shift, the China Shock 2.0, is better termed a future shock. And it is led by capital-intensive, hi-tech industries:
EVs , solar power, wind turbines,
batteries , smart grids and artificial intelligence. These sectors are not driven by low wages but by scale, supply chain integration and a relentless push for innovation driven by a series of world-leading institutions that only seem to be strengthening because of a switch away from state-led subsidies to a greater emphasis on market discipline and research-driven innovation.
If the 19th century belonged to steam and the United Kingdom, and the 20th century to silicon and the United States, then the 21st century will belong to those who lead the green transition. China is doing just that. The benefits are being felt worldwide. In 2023 alone, China installed more solar capacity than the entire rest of the world combined: 1.6 times as much. It had nearly double the rest of the world's wind installations and is driving down clean energy costs worldwide.
The cost of solar panels has dropped from 24 US cents per watt of capacity in 2023 to just 11 US cents in 2024. China is not so much supporting the green transition as underwriting it.
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