In 2025, profits in China’s high-tech manufacturing sector are projected to grow 13.3% year on year, outpacing the broader industrial sector by nearly 13 percentage points.
This number is now at the center of an ongoing debate in trade ministries, economics departments and editorial pages across the West.
Where does the China Shock 2.0 narrative come from?
This expression is similar to the original China Shock, which refers to the decline in manufacturing jobs in developed economies after the country joined the WTO in the early years of the new millennium.
The revised version reflects fears over China’s rapid encroachment on industries such as electric vehicles, solar panels and semiconductors, which were dominated by the United States and Europe for decades.
According to Bai Ming of the Chinese Academy of International Trade and Economic Cooperation (an institution affiliated with China’s Ministry of Commerce), this characterization is indicative of Western unease rather than economic reality.
He describes the narrative with disquiet rather than analysis, which is a reaction to China succeeding in industries where that success was not expected.
Western critics often cite state support as a catalyst for China’s competitive success, arguing that such support is an unfair distortion of the market. However, Mao Keji, a policy researcher at the Center for International Cooperation of China’s National Development and Reform Commission, challenges this notion.
According to Keiji, China’s state support is structural, involving investment in infrastructure, education and healthcare, rather than direct subsidies to industries.
For example, during the 14th five-year plan spanning from 2021 to 2025, China invested approximately $495 billion in the public sector in terms of the country’s central budget investment.
Additionally, China has set aside approximately $2.2 trillion to issue local government bonds for infrastructure development.
Whether this is a market-distorting subsidy or legitimate industrial policy remains a live and genuinely disputed question among independent economists.
In the first quarter of 2026, China’s trade with Belt and Road partner countries grew 14.2% year on year, accounting for more than half of China’s total trade volume. Trade with ASEAN and Latin America each increased by 15.4 percent, while African trade increased by 23 percent.
Chinese exports of photovoltaic products to sub-Saharan Africa increased by nearly 2.5 times over the same period. These figures reflect real demand, particularly in developing economies seeking large-scale affordable infrastructure and clean energy technology.
In the UK, a plug-in hybrid SUV made by Chinese automaker Chery became the country’s best-selling new car in March. British Trade Secretary Peter Kyle told BBC If Chinese automakers set up factories in the UK their government would not stand in the way of consumer choice and flag potential job and investment opportunities.
