Latest news with #ChinaShock
Express Tribune
3 days ago
- Business
- Express Tribune
China is catching up with the United Sates
Listen to article David Autor and Gordon Hanson, two economic professors known for their research into how globalisation and especially the rise of China is reshaping the American labour market, contributed an article to the Opinion pages of The New York Times. The article was titled "Did we learn nothing from the 'China Shock'?" They wrote: "The first time China upended the U.S. economy between 1999 and 2007, it helped erase nearly a quarter of all technological jobs. Known as the 'China Shock', it was driven by a singular process — China's late 1970s transition from Maoist central panning to a market economy, which rapidly moved the country's labor and capital from collective rural farms to urban factories. Waves of inexpensive goods from China imploded the economic foundations of places where manufacturing was the main game in town... Twenty years later, these workers haven't recovered from those job losses. Although places like these are growing again, most job gains are in low-wage industries such as textiles, sporting goods electronics and auto parts." China's transition to manufacturing was complete once Chairman Deng Xiaoping succeeded Mao as the supreme leader. He opened the country to the outside world and invited foreign participation in China's development. While what Autor and Hanson described in their 2013-16 research story has lost its relevance, they have begun to focus on what they call China Shock 2. This has seen the transition from China as an underdog and is successfully developing innovative sectors such as aviation, AI, telecommunications, microprocessors, robotics, quantum computing, biotech, pharma and solar batteries. To quote again from the authors, "In the 1990s and 2000s, private Chinese businesses working alongside multinational corporations had turned China into the world's factory. The new Chinese model is different. China has created an agile, if costly, innovation system in which local officials such as mayors and governors are rewarded for growth in certain advanced sectors. An example of the outcome is the city of Hefei located in a poor hinterland province. By putting up venture funding, taking risks on supporting EV (electric vehicles) producers, and investing in local research and development, Hefei made the leap into the country's top industrial tier in barely half a decade." China is now the world's largest and most innovative producers of electric vehicles. BYD (EV), CATL (EV batteries), DJI (drones) and LONGi (solar wafers) are all Chinese startups, none more than 30 years' old. The rest of the world, including the United States, is ill prepared to compete with these privately owned but state-supported enterprises. If the extent to which China has drawn not only even but overtaken the United States, we might look at the study done by the Australian Strategic Policy Institute, a think-tank. According to the Institute, the United States led China in 60 of 64 frontier technologies, such as AI and cryptography, from 2003 to 2007, while China led the United States in just three. In the Institute's most recent report, the rankings were flipped. China led in 57 of 64 key technologies while the United States had the lead in only seven. Autor and Hanson are proposing a four-pronged approach to the Chinese challenge. First, the US should work with other old economies that face similar challenges such as the European Union, Japan and South Korea rather than imposing tariffs. Second, the US government should encourage China to build in America high technology plants such as those developing rare earth minerals as well as those making batteries and electric vehicles. The government should get involved in developing the industries that produce these items. At the time of the WWII, the Office of Scientific Research and Development brought major developments in jet propulsion, radar and mass-produced penicillin. Later, NASA accepted the Soviet Union challenge which sent the first astronaut to circle the earth by sending and bringing back men to and from the moon and launched the Operation Warp Speed which partnered with pharmaceutical companies to produce a Covid-19 vaccine faster than any other major vaccine had been produced. The third area of government sponsorship, the authors advocate, is for the United States to choose the battles that it can win (semiconductors) or those it cannot afford to lose (development of rare earths). The fourth priority is to prevent the devastating impacts of job loss from the next major shock. Tariffs, President Trump's preferred policy option to deal with the challenges the country faces, is not right for the actions needed. The authors conclude their assessment with the following words: "We must nourish industries that have high potential for innovation, funded by joint investments by the public and private sectors. These industries are in play globally, something China figured out a decade ago. America should stop fighting the last trade war and meet China's challenge in the current one." These ecosystems, with the government in the lead, will need supporting infrastructure: reliable and inexpensive energy generation, rare earths, modern shipping and universities with vibrant STEM programmes. This will mean pulling back from subsidising legacy sectors such as coal and oil; restoring federal support for scientific research; and welcoming rather than demonising the talented foreign arrivals into the country who would help the country they have adopted as their own to move forward. This is not the direction in which America, under Trump, is headed. President Trump acted out the programme laid out by Elon Musk, the world's richest man who joined Trump to redesign and refocus the public sector. His DOGE programme was aimed at reshaping the government but it did more damage than good. His moves reduced the country's capacity to innovate. On July 21, major newspapers took out full-page advertisements that said the following in bold letters: "America doesn't settle for second place in Science. We don't play catch up. We build what others copy. Invent what others copy. The science that wins on the battlefield and finds breakthrough in the bloodstream — that's the sharp edge of American power. American science that is funded by the federal government is launched from the flight deck. Developed by American industry. Proven on our factory floors. And tested on the front line - everyday. The only thing American science can't do. Fund itself. That depends on the wisdom and leadership of those we send to Washington." With Donald Trump occupying the White House, that is not happening.
CNN
3 days ago
- Business
- CNN
On GPS: Is a second ‘China shock' coming?
The 'China shock' at the turn of this century wreaked havoc on US manufacturing and upended the global trade system. Fareed speaks with David Autor, one of the economists who first identified the 'China shock.' He warns that a second shock is coming — and this one will be worse.
CNN
4 days ago
- Business
- CNN
On GPS: Is a second ‘China shock' coming?
The 'China shock' at the turn of this century wreaked havoc on US manufacturing and upended the global trade system. Fareed speaks with David Autor, one of the economists who first identified the 'China shock.' He warns that a second shock is coming — and this one will be worse.
Straits Times
15-07-2025
- Business
- Straits Times
We warned about the First China Shock. The next one will be worse
The Trump administration is fighting the last war while China marches towards dominating the industries of the future. China Shock 2.0, the one that's fast approaching, is where China goes from underdog to favourite, say the writers. The first time China upended the US economy, between 1999 and 2007, it helped erase nearly a quarter of all US manufacturing jobs. Known as the China Shock, it was driven by a singular process – China's late-1970s transition from Maoist central planning to a market economy, which rapidly moved the country's labour and capital from collective rural farms to capitalist urban factories. Waves of inexpensive goods from China imploded the economic foundations of places where manufacturing was the main game in town, such as Martinsville, Virginia, and High Point, North Carolina, formerly the self-titled sweatshirt and furniture capitals of the world. Twenty years later, those workers haven't recovered from those job losses. Although places like these are growing again, most job gains are in low-wage industries. A similar story played out in dozens of labour-intensive industries simultaneously: textiles, toys, sporting goods, electronics, plastics and auto parts.
New York Times
14-07-2025
- Business
- New York Times
We Warned About the First China Shock. The Next One Will Be Worse.
The first time China upended the U.S. economy, between 1999 and 2007, it helped erase nearly a quarter of all U.S. manufacturing jobs. Known as the China Shock, it was driven by a singular process — China's late-1970s transition from Maoist central planning to a market economy, which rapidly moved the country's labor and capital from collective rural farms to capitalist urban factories. Waves of inexpensive goods from China imploded the economic foundations of places where manufacturing was the main game in town, such as Martinsville, Va., and High Point, N.C., formerly the self-titled sweatshirt and furniture capitals of the world. Twenty years later, those workers haven't recovered from those job losses. Although places like these are growing again, most job gains are in low-wage industries. A similar story played out in dozens of labor-intensive industries simultaneously: textiles, toys, sporting goods, electronics, plastics and auto parts. Yet once China's Mao-to-manufacturing transition was complete, sometime around 2015, the shock stopped building. Since then, U.S. manufacturing employment has rebounded, growing under President Barack Obama, the first Trump term and President Biden. So why, you might ask, are we still talking about the China Shock? We wish we weren't. We published the research in 2013, 2014 and 2016, along with our collaborator David Dorn of the University of Zurich, which detailed for the first time how Chinese import competition was devastating parts of America, through permanent declines in employment and earnings. We are here to argue now that policymakers are spending far too much time looking backward, fighting the last war. They should be spending much more time examining what's emerging as a new China Shock. Spoiler alert: This one could be far worse. China Shock 1.0 was a one-time event. In essence, China figured out how to do what it should have been doing decades earlier. In the United States, that led to unnecessarily painfully job losses. But America was never going to be selling tennis sneakers on Temu or assembling AirPods. China's manufacturing work force is thought to be well in excess of 100 million, compared with America's 13 million. It's bordering on delusional to think the United States can — or should even want to — simultaneously compete with China in semiconductors and tennis sneakers alike. China Shock 2.0, the one that's fast approaching, is where China goes from underdog to favorite. Today, it is aggressively contesting the innovative sectors where the United States has long been the unquestioned leader: aviation, A.I., telecommunications, microprocessors, robotics, nuclear and fusion power, quantum computing, biotech and pharma, solar, batteries. Owning these sectors yields dividends: economic spoils from high profits and high-wage jobs; geopolitical heft from shaping the technological frontier; and military prowess from controlling the battlefield. General Motors, Boeing and Intel are American national champions, but they've all seen better days and we're going to miss them if they're gone. China's technological vision is already reordering governments and markets in Africa, Latin America, Southeast Asia and increasingly Eastern Europe. Expect this influence to grow as the United States retreats into an isolationist MAGAsphere. Rank and share of the world's most cited research in each field, by country Source: Australian Strategic Policy Institute Want all of The Times? Subscribe.
