The Next China Shock Is Here | The Ezra Klein Show

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. 0:00 Intro 1:33 China Shock 1.0 7:54 What makes the Chinese economy distinct 13:07 China Shock 2.0 18:20 How Chinese manufacturing advanced 26:17 Is China just winning? 30:41 Currency manipulation 35:27 National security supply chains 36:18 Trump 1.0 trade policy 39:09 Biden administration trade policy 42:37 Trump 2.0 tariffs 48:28 China’s leverage points 49:43 Did the trade wars work? 56:40 China Shock 3.0? 59:50 Interdependence or decoupling? 1:05:19 Book recommendations Read the full transcript here: https://www.nytimes.com/2026/08/21/op... Watch more on @EzraKleinShow Thoughts? Guest suggestions? Email us at ezrakleinshow@nytimes.com. You can find transcripts (posted midday) 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-...