Reflecting on the China shock: a decade of learning and assessment

Yang Liang

Chapter 33 in Elgar Encyclopedia of International Trade, 2026, pp 166-172 from Edward Elgar Publishing

Abstract: The “China shock” refers to the rapid and large-scale rise of Chinese import competition following China's economic reforms and entry into the World Trade Organization. This entry reviews a decade of research on its causes, labor market consequences, and broader economic and political effects. Seminal studies provide causal evidence that Chinese imports led to significant job losses in US manufacturing, persistent earnings declines, and localized economic stagnation. Spillovers across supply chains further magnified the employment shock, and research from other countries documents similar disruptions in the labor market. While much of the debate has emphasized losses, growing evidence suggests broader general equilibrium effects, including sectoral reallocation, productivity gains, and export growth. Politically, the concentrated costs of trade proved far more visible than its well-spread benefits, fueling populist backlash and reshaping debates over globalization and trade policy more broadly.

Keywords: China Shock; Import Competition; Labor Markets; Manufacturing; General Equilibrium (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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