Was the late Zhu Rongji responsible for the original ‘China shock’?
US and other Western multinationals were all chasing the lowest price that China offered – and willing to sacrifice jobs for easy profits
Here, I start with a useful summary, from an American point of view, of “The China Shock and Its Enduring Effects”, a 2022 study by the Centre on China’s Economy and Institutions at Stanford University: “The impact of the China shock accounted for 59.3 per cent of all US manufacturing job losses between 2001 and 2019, mostly in labour-intensive manufacturing where fewer workers had college degrees.
“Laid-off workers converted nearly one for one into long-term unemployment, causing a corresponding rise in government transfer receipts per capita. Adverse impacts of the China shock lasted two decades beyond the initial trade shock and one decade following its peak intensity in 2010. Despite lower consumer prices of goods imported from China, 6.3 per cent of the US population still experienced net losses in real income due to the China shock.”
Even before Zhu successfully negotiated China’s admission to the World Trade Organization in December 2001, the country was already emerging as the go-to hub for many Western manufacturers and producers.
