US High School Economics class: China is suffering its own ‘China shock’

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China is undergoing its own version of the “China shock” as rising wages, automation and global competition push labour-intensive manufacturing jobs to countries like Vietnam and Indonesia. Millions of low-skilled workers are being displaced, while high-tech industries, though expanding, offer fewer employment opportunities and require different skills. This economic transformation poses significant challenges for China’s growth model, labour market stability and social cohesion.

Essential Question: How is China’s shift from labour-intensive manufacturing to high-tech production reshaping its economy — and what are the economic and social consequences for its workforce?

Read the FT article and then answer the questions below

China is suffering its own ‘China shock’

• What made China such a dominant force in low-end manufacturing in the recent past?

• Why is China losing its competitive edge in manufacturing to countries like Vietnam and Indonesia?

• How has Zhou Yousheng’s shoe factory changed over the past decade, and what does this reflect about China’s economy?

• Using data from the article, describe what has happened to employment in China’s labour-intensive industries since 2011

• What is meant by the “China shock” that is now affecting China itself?

• How does the story of Martinsville, Virginia, help explain the risks for China?

• How are Chinese policymakers responding to manufacturing job losses?

• How is automation affecting both low-skilled and high-skilled jobs in China?

• Why is China facing a demographic challenge in its workforce?

• What are some possible negative social consequences of these labour market changes in China?

Joel Miller and James Redelsheimer, Foundation for Economic Education.
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