China shock

Common card · No. 316988

The China shock (or China trade shock) is the impact of rising Chinese exports on manufacturing employment in the United States and Europe after China's accession to the World Trade Organization in 2001. Studies agreed that the China trade shock reduced U.S. manufacturing employment, although their estimates of the scale of the effect range from 550,000 (explaining about 16% of the total decline in manufacturing employment in the U.S. between 2000 and 2007), through 1.8-2.0 million, to 2.0-2.4 million. Studies have also shown that there was "higher unemployment, lower labor force participation, and reduced wages in local labor markets" in U.S. regions that have industries that competed with Chinese industries. Losses in manufacturing employment have also been observed in Norway, Spain, Canada, and Germany. A 2023 review of existing economic research concluded that US-China trade since the early 2000s caused aggregate welfare gains in both countries; had winners and losers in the US;...

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