Global observers are noting 'China shock 2.0', marked by intense competition in advanced manufacturing. Unlike the earlier low-tech manufacturing surge, this new phase sees China upgrading its export strength. Policymakers frame this as a strategic shift from traditional goods to high-tech sectors like electric vehicles.

Driven by intensifying competition in advanced manufacturing, the world is waking up to “China shock 2.0”. The first “shock”, associated with China’s accession to the World Trade Organization in 2001, focused on low-tech manufacturing. Of course, this latest “shock” isn’t framed as such by Chinese policymakers. They present it as an upgrade in export strength, often described as a shift from the “old three” of textiles, furniture and home appliances to the “new three” of electric vehicles,...