China Shock 2.0 and case for global efficiency
The global economy is experiencing 'China Shock 2.0', a new wave of Chinese exports including electric vehicles and high-tech hardware, which is seen as a manifestation of a massive leap in manufacturing productivity. China's trade surplus surged past $1 trillion in 2025, and the 'consumer surplus' in the US and Europe has expanded significantly in sectors where Chinese competition is fierce.
The global economy is witnessing 'China Shock 2.0', a new wave of exports from China, including electric vehicles, sophisticated semiconductors, and high-tech hardware. China's trade surplus surged past $1 trillion in 2025. Chinese manufacturers have achieved a level of supply chain integration that allows them to produce high-quality electric vehicles at a fraction of the cost of their Western counterparts. A standard European or American electric sedan might retail for $45,000, while Chinese equivalents are entering global markets at price points closer to $25,000. The latest generation of solid-state batteries from China offers energy densities that many Western laboratories are still years away from perfecting. China's manufacturing productivity is creating a global public good in the form of lower prices, acting as a critical stabiliser in a world where the cost of living has become a primary political grievance.
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