Brad Setser follows Chinese trade closer than just about anyone else on earth, and he thinks we’re in the early days of a China Shock 2.0.
The first China Shock was when China came to dominate low-end manufacturing in the 2000s, filling American shelves with cheap clothes, toys and electronics, while devastating American factory towns. This new China Shock could be even more destabilizing. China now dominates advanced manufacturing: electric vehicles, batteries, solar panels. It’s outcompeting nearly all high-end manufacturing around the world, and other countries are just starting to feel the pain. And China isn’t slowing down. It’s moving into software, too. Its frontier A.I. models are neck and neck with American ones.
China’s success poses a serious threat to the economies and domestic politics of countries around the world. So what should those countries do about it? 
Setser is a senior fellow at the Council on Foreign Relations.He served in top trade and economic roles in the Biden and Obama administrations. And he is widely cited across the field as one of the top analysts of China’s economy and trade practices.
Book Recommendations:
<a href="https://www.harpercollins.com/products/the-party-richard-mcgregor?variant=32207545958434" target="_blank" rel="noopener noreferrer">The Party</a> by Richard McGregor
<a href="https://global.oup.com/academic/product/the-volatility-machine-9780195143300?cc=us&lang=en&" target="_blank" rel="noopener noreferrer">The Volatility Machine</a> by Michael Pettis
<a href="https://www.panmacmillan.com/authors/soumaya-keynes/how-to-win-a-trade-war/9781035090181" target="_blank" rel="noopener noreferrer">How to Win a Trade War</a> by Soumaya Keynes and Chad Bown
Thoughts? Guest suggestions? Email us at <a href="mailto:ezrakleinshow@nytimes.com" rel="noopener noreferrer">ezrakleinshow@nytimes.com</a>.
You can find the transcript and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs.html
This episode of “The Ezra Klein Show” was produced by Rollin Hu. Fact-checking by Michelle Harris, with Kate Sinclair, Mary Marge Locker and Julie Beer. Our senior engineer is Jeff Geld, with additional mixing by Johnny Simon. Our recording engineer is Aman Sahota. Cinematography by Marina King and Kyle Kelley. Video editing by Dani Dillon and Brandon Belk-Yee. Our executive producer is Claire Gordon. The show’s production team also includes Marie Cascione, Annie Galvin, Kristin Lin, Emma Kehlbeck, Jack McCordick and Jan Kobal. Original music by Pat McCusker. Audience strategy by Shannon Busta. The director of New York Times Opinion Shows is Annie-Rose Strasser.
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