China is shifting its focus towards new avenues of growth, particularly in the sectors of solar cells, electric vehicles (EVs), and lithium-ion batteries.
This strategic pivot could potentially trigger a "China shock 2.0," impacting economies worldwide.
In response, the US, EU, and other nations are devising strategies to counter China's increasing dominance in these industries.
China's economy is currently undergoing a challenging transition post-COVID, with President Xi Jinping's administration advocating for these industries as key drivers of economic growth.
China is actively engaged in the manufacturing and export of these goods, such as solar panels, which has led to a global surplus and subsequent price crash.
This development reflects the initial "China shock," a term coined to describe China's economic ascent and its far-reaching effects on global trade and labor markets.
As China strives for self-sufficiency in these strategic industries, Western countries are taking measures to prevent China from establishing full control.
They are diversifying their supply chains and investing in domestic manufacturing, as evidenced by the US's CHIPS Act and the European Union's investigations into potential illegal subsidization of Chinese EV imports.
China perceives these actions as containment efforts by the West and is expanding its trade partnerships with Southeast Asia, Africa, and Latin America.
This shift in trade dynamics indicates a shifting global landscape and raises the prospect of escalating trade tensions, particularly as the US presidential election season approaches.